EXHIBIT 10.13


 


Execution
Version


 


 


CONFIDENTIAL
PROVISIONS REDACTED


 


COLLABORATION
AGREEMENT


 


THIS COLLABORATION AGREEMENT
(the “Agreement”) is entered into as of September 12,
2005 (the “Effective Date”) by and between
Protein Design Labs, Inc., a Delaware corporation having its offices at
34801 Campus Drive, Fremont, California 94555 (“PDL”),
and Biogen Idec MA Inc., a Massachusetts corporation having offices at 14
Cambridge Center, Cambridge, Massachusetts 02142 (“Biogen Idec”).
PDL and Biogen Idec may each be referred to in this Agreement individually as a
“Party” and collectively as the “Parties.”


 


RECITALS


 


WHEREAS, PDL
possesses worldwide rights to develop, manufacture, market, and sell certain
proprietary antibodies directed at certain antigens (such antigens defined
below as “Collaboration Targets”) and;


 


WHEREAS, PDL has
research and development programs for such antibodies as well and for certain
compounds relating to the Collaboration Targets; and


 


WHEREAS, Biogen Idec
and PDL wish to collaborate in the research, development, manufacturing and
commercialization of products for the Collaboration Targets, including such
antibodies and compounds, under the terms and conditions set forth below.


 


NOW THEREFORE, in
consideration of the foregoing premises and the mutual covenants contained
herein, the Parties, intending to be legally bound, agree as follows:


 


ARTICLE 1



DEFINITIONS


 


The following capitalized terms, whether used in the
singular or the plural, shall have the following meanings as used in this
Agreement unless otherwise specifically indicated:


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


	
   

  	
  1.1

  	
  “5

  	
  1” means [****].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  “5

  	
  1 Target Field” means the diagnosis, treatment or
  prevention of human diseases.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  “5

  	
  1 Target Future Product” means [****].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  “5

  	
  1 Target Product” means [****].

  



 


1.5                               “Affiliate”
means any corporation or other business entity controlled by, controlling,
or under common control with another entity, with “control” meaning: (a) direct
or indirect beneficial ownership of at least fifty percent (50%) of the voting
stock of, or at least fifty percent (50%) interest in the income of, such
corporation or other business entity, or (b) the possession, directly or
indirectly, of the power to direct the management or policies of a legal
entity, whether through the ownership of voting securities or by contract
relating to voting rights or corporate governance. For purposes of clarity,
Affiliates of Biogen Idec shall include Biogen Dompé SRL and Biogen Dompé AG.


 


1.6                               “Annual
Workplan/Budget” means, as to a Collaboration Product the detailed schedule of
Development activities and budgets prepared pursuant to Section 3.3.


 


1.7                               “Antibody”
means a molecule comprising or containing: (a) one or more immunoglobulin
variable domains; (b) fragments, variants, modifications or derivatives of
molecules described in the foregoing clause (a); and (c) the nucleic acid
consisting of a sequence of nucleotides encoding (or complementary to a nucleic
acid encoding) an antibody. Antibody shall include any antibody monospecific
and bispecific antibodies; less than full-length antibody forms such as Fv, Fab,
and F(ab’)2; and  any antibody
or fragment that is conjugated or fused to any other composition, including for
example, a toxin, radionuclide, small molecule, polypeptide or polypeptide
fragment. The term Antibody includes any human, humanized, primatized, chimeric
or other antibody.


 


1.8                               “Antibody
Product” means any pharmaceutical product having an Antibody as an active
ingredient.


 


1.9                               “Approved
Budget” means the then-current JSC approved aggregate annual budget for the
current calendar year for the Development and/or Commercialization of all
Collaboration Products.


 


1.10                        “Asthma Field” means the treatment and/or prevention of
asthma or other respiratory diseases.


 






*Certain information on
this page has been omitted and filed separately with the commission. Confidential
treatment has been requested with respect to the omitted portions.


 


2

















 


1.11                        “Biogen
Idec Indemnitees” shall have the meaning set forth in Section 15.1.


 


1.12                        “Biogen
Idec Inventions” means all Inventions that (a) relate to or are useful
with any Antibody Product or Non-Antibody Product that are directed against or
incorporate a Collaboration Target, (b) are made during the Term by one or
more employees of Biogen Idec or its Affiliates or persons contractually
required to assign or license patent rights covering such inventions to Biogen
Idec or its Affiliates, in the course of performing Biogen Idec’s obligations,
or exercising Biogen Idec’s rights, under this Agreement, and (c) are not Joint
Inventions.


 


1.13                        “Biogen
Idec Know-How” means all Know-How that is (a) Controlled by Biogen
Idec or its Affiliates at any time during the Term; (b) used by or on
behalf of Biogen Idec or its Affiliates in the development or commercialization
of a Collaboration Product and (c) reasonably necessary or useful for PDL
to (i) perform its obligations under this Agreement or (ii) develop
or commercialize a Collaboration Product or Royalty Product in the Field;
provided that Biogen Idec Know-How shall not include methods of manufacturing,
production and test methods, procedures and batch records, manufacturing and
testing summary data, process and assay validation information, designing,
developing or preparing Antibodies including methods of humanizing Antibodies,
methods of reducing the immunogenicity of Antibodies, methods of modifying
effector function, and methods of increasing the affinity or half-lives of
Antibodies, unless necessary for PDL to perform its Development  or Commercialization obligations hereunder.


 


1.14                        “Biogen
Idec Patent Rights” means Patent Rights that claim  Technology Controlled by Biogen Idec or its
Affiliates at any time during the Term and that relate in whole or in part to
the Collaboration Targets or the manufacture, use or sale of Products. Biogen
Idec Patent Rights shall not include Joint Patents but shall include Biogen
Idec Target Patent Rights. As of the Effective Date, to Biogen Idec’s
knowledge, there are no Biogen Idec Patent Rights.


 


1.15                        “Biogen
Idec Target Patent Rights” means Patent Rights that claim  Technology Controlled by Biogen Idec or its
Affiliates at any time during the Term and that relate in substantial part to
the Collaboration Targets or in substantial part to the manufacture, use or
sale of Products.


 


1.16                        “Biogen
Idec Technology” means Biogen Idec Patent Rights and Biogen Idec Know-How.


 


1.17                        “Calendar
Quarter” means the respective periods of three consecutive calendar months
ending on March 31, June 30, September 30 or December 31,
for so long as this Agreement is in effect.


 


1.18                        “Change of
Control” means with respect to a Party: (i) the sale of all or
substantially all of such Party’s assets or business relating to this
Agreement; (ii) a merger, reorganization or consolidation involving such
Party in which the voting


 


3

















 


securities of such Party
outstanding immediately prior thereto cease to represent at least fifty percent
(50%) of the combined voting power of the surviving entity immediately after
such merger, reorganization or consolidation; or (iii) a person or entity,
or group of persons or entities, acting in concert acquire more than fifty
percent (50%) of the voting equity securities or management control of such
Party.


 


1.19                        “Clinical
Supplies” shall mean supplies of Collaboration Product or Royalty Products,
as the case may be, in suitable form, whether Manufactured by PDL or by Biogen
Idec, as specified under this Agreement or under any Manufacturing agreement
between the Parties, Manufactured in compliance with GMP, if required given the
intended use, and ready to be used for the conduct of pre-clinical and/or human
clinical trials of such Product in the Field by the Parties pursuant to the
Development Plan and Annual Workplan/Budget.


 


1.20                        “Collaboration”
means the Parties’ program of collaborative Development, and
Commercialization of Products contemplated by this Agreement.


 


1.21                        “Collaboration
Committee” or “Committee”
means any of the JSC, JDCs, JCCs, JPC or JFC, or any other committee formed with
the approval of such other committees.


 


1.22                        “Collaboration
Invention” means a Joint Invention, Biogen Idec Invention or PDL Invention.


 


1.23                        “Collaboration
Product” means a Product being jointly Developed and Commercialized by the
Parties under this Agreement pursuant to a Development Plan or a
Commercialization Plan. For the avoidance of doubt, a Collaboration Product
shall not be a Royalty Product.


 


1.24                        “Collaboration  Product Profit”
means the profits or losses resulting from the Commercialization of Collaboration
Products in the Profit Sharing Territory and shall be equal to [****].


 


1.25                        “Collaboration
Target” means [****].


 


1.26                        “Combination
Product” shall have the meaning set forth in Exhibit C.


 


1.27                        “Combination
Product Amount” shall have the meaning set forth in Exhibit C.


 






*Certain information on
this page has been omitted and filed separately with the commission. Confidential
treatment has been requested with respect to the omitted portions.


 


4

















 


1.28                        “Commercial
Supplies” shall mean supplies of Collaboration Product or Royalty Product,
as the case may be, in suitable final packaged form, as specified under a
Commercial Supply Agreement, Manufactured in compliance with GMP, and ready to
be offered for commercial sale for use in the Field in the Territory by Biogen
Idec and/or PDL, and/or their Affiliates, or permitted licensees or
sublicensees.


 


1.29                        “Commercial
Supply Agreement” shall have the meaning set forth in Section 8.3(a).


 


1.30                        “Commercialization”
means all activities undertaken relating to the manufacture, marketing,
distribution, offer for sale and sale of a Product in the Field, including
pre-marketing, advertising, education, planning, marketing, promotion,
distribution, market and product support, post-Regulatory Approval product
support and related medical affairs.


 


1.31                        “Commercialization
Plan” shall have the meaning set forth in Section 6.1(a).


 


1.32                        “Confidential
Information” means all Know-How, information (whether in written, oral,
electronic, visual, tangible, or other form) and materials, including
biological and other tangible materials, that are disclosed by one Party to the
other Party prior to the Effective Date or during the Term and are either
identified as confidential at the time of disclosure or should reasonably be
believed to be of the type of information that would be considered confidential
under the circumstances.


 


1.33                        “Controlled”
means, with respect to a Party and its Affiliates, and any intellectual
property right, that the Party owns or has a license to such intellectual
property right and has the ability to grant to the other Party a license or
sublicense to such intellectual property right without violating the terms of
any agreement or other arrangements with any Third Party existing at the time
such Party would be first required hereunder to grant the other Party such
license or sublicense.


 


1.34                        “Controlling
Party” shall have the meaning set forth in Section 12.5(b)(vi).


 


1.35                        “Co-Promoting
Party” shall have the meaning set forth in Section 7.1(c).


 


1.36                        “Co-Promotion Option” shall have the meaning set forth in Section 7.1(a).


 


1.37                        “Co-Promote
Product” shall have the meaning set forth in Section 7.4.


 


1.38                        “Cost of
Clinical Supplies” shall have the meaning set forth in Exhibit C.


 


1.39                        “Cost of
Goods Manufactured for Sale” or “COGM” shall
have the meaning set forth in Exhibit C.


 


1.40                        “Cost of
Sales” shall have the meaning set forth in Exhibit C.


 


5

















 


1.41                        “Daclizumab
Product” means [****].


 


1.42                        “Detail”
or “Detailing” means a face-to-face presentation by a Party’s sales
representative, to one or several medical professional(s) having prescribing
authority in the applicable territory in the Field, as well as to other
mutually agreed individuals or entities that have significant impact or
influence on prescribing decisions in the applicable territory in the Field,
where the principal objective of such presentation is to emphasize the features
and function of such Collaboration Product in the Field in a balanced manner. A
Detail does not include a reminder or sample drop.


 


1.43                        “Development”
means all research and pre-Regulatory Approval development and regulatory
activities in the Field regarding a Product. This includes (i) research,
preclinical testing, toxicology, formulation, manufacturing-related technology
development, and clinical studies of Products; and (ii) preparation,
submission, review, and development of data or information for the purpose of
submission to a governmental authority to obtain Regulatory Approval of
Products, and outside counsel regulatory legal services related thereto. Development
shall include development and regulatory activities for additional Indications
for a Product after Regulatory Approval of such Product but shall not include
Post-Approval Clinical Trials or Phase 4 Trials with respect to an approved
Indication.


 


1.44                        “Development
Expenses” shall have the meaning set forth in Exhibit C.


 


1.45                        “Development
Plan” shall have the meaning set forth in Section 3.3(a).


 


1.46                        “Development
Program” means any of the following: (a) the program of Development
contemplated by this Agreement for [****], (b) the program of Development
contemplated by this Agreement for [****], and (c) the program of
Development contemplated by this Agreement for [****], in each case as such
programs may be revised or amended from time to time.


 


1.47                        “Diligent
Efforts” means reasonable and good faith efforts by a Party to accomplish
such objective as that Party would normally use to accomplish a similar
objective under similar circumstances, it being understood and agreed that,
with respect to the Development or Commercialization of a Collaboration Product
or Royalty Product, as the case may be, such efforts shall be similar to those
efforts and resources commonly used by a Party for a similar pharmaceutical
product owned by it or to which it has rights, which product is at a similar
stage in its development or product life and is of similar market potential in
the applicable market taking into account efficacy, safety, approved labeling,
the competitiveness of all products in the applicable market, the


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


6

















 


patent and other
proprietary position of the product, the likelihood of regulatory approval
given the regulatory structure involved, the profitability of the product
including the royalties payable to licensors of patent or other intellectual
property rights, alternative products and other relevant factors. Diligent
Efforts shall be determined on a market-by-market and Indication-by-Indication
basis for a particular Product, and it is anticipated that the level of effort
shall be different for different markets, and shall change over time,
reflecting changes in the status of the Product and the market(s) involved.


 


1.48                        “Drug
Approval Application” means a Biologics License Application or an
equivalent application for Regulatory Approval required before commercial sale
or use of a pharmaceutical product in a field in a regulatory jurisdiction.


 


1.49                        “EU
Territory” means all countries that are officially recognized as member
states of the European Union. There are twenty-five (25) such member states as
of the Effective Date, namely:  Austria,
Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and United
Kingdom.


 


1.50                        “Executive”
means the Chief Executive Officer of a Party or such other executive
officer designated by such person. If the Chief Executive Officer position for
either Party is vacant or does not exist, then the person having the most
nearly equivalent position at such Party (or such individual’s designee) shall
be deemed to be the Executive of such Party.


 


1.51                        “Existing Product” means any one or more of the Daclizumab
Product, the Fontolizumab Product or the Volociximab Product.


 


1.52                        “Field”
means: [****].


 


1.53                        “First
Commercial Sale” means, for each Collaboration Product or Royalty Product,
as the case may be, in each country, the first sale for end use or consumption
to a Third Party of such Product in the country by a Party, its Affiliate, or
its sublicensee, after the granting of Regulatory Approval in the relevant
Field for the Collaboration Product or Royalty Product, as the case may be, by
the relevant governing authorities. First Commercial Sale excludes any sale or
other distribution for use in a clinical trial or other Development activity.


 


1.54                        “Fontolizumab
Product” means [****].


 


1.55                        “FTE Rate”
shall have the meaning set forth in Exhibit C.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


7

















 


1.56                        “Future Product” means [****].


 


1.57                        “GMP”
means current Good Manufacturing Practices, as defined under the rules and
regulations of the United States Food and Drug Administration, as the same may
be amended from time to time.


 


1.58                        “Gross
Sales” shall have the meaning set forth in Exhibit C.


 


1.59                        “IFN-”
means [****].


 


1.60                        “IFN- Target Field” means the diagnosis,
treatment or prevention of human diseases.


 


1.61                        “IFN- Target Future Product” means [****].


 


1.62                        “IFN- Target Product” means [****].


 


1.63                        “[****]
Product” means the [****].


 


1.64                        “IL-2R” means
(a) the protein commonly known as the IL-2 receptor alpha subunit “p55” “TAC
antigen”, “CD25 antigen “T-Cell Growth factor receptor”,  “TCGFR” and (b) fragments of the
foregoing.


 


1.65                        “IL-2R Target
Field” means the diagnosis, treatment or prevention of human diseases, but [****].


 


1.66                        “IL-2R
Target Future Product” means [****].


 


1.67                        “IL-2R
Target Product” means [****].


 


1.68                        “Independent
Indication” means, with respect to a particular Collaboration Product, any
Indication for which a Party has exercised its opt-out right pursuant to Section 4.1
and shall include all Opt Out Indications, provided that such Party has not
exercised its opt-in right for such Indication pursuant to Section 4.4
(after which such Indication shall cease to be an Independent Indication).


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


8

















 


1.69                        “Independent
Product” means a former Collaboration Product for which a Party terminated
its participation in such Product pursuant to Section 4.1, and as to which
no Indication is (i) being developed under the Collaboration, or (ii) is
the subject of a proposal made in writing to the JSC under Section 3.10(a) as
to which the JSC has not made a decision.


 


1.70                        “Indication”
means an illness or sickness; or any interruption, cessation or disorder of
a particular bodily function, system or organ; in any case regardless of the
severity, frequency or route of any treatment.


 


1.71                        “Initial
Development Program Budget” means the budget attached hereto as part of the
initial draft Development Plan attached as Exhibit 3.3.


 


1.72                        “Invention”
means any process, method, composition of matter, article of manufacture,
discovery or finding that is conceived and/or reduced to practice (whether or
not patentable).


 


1.73                        “Joint
Commercialization Committee” or “JCC” shall have the meaning set forth in Section 2.4(a).


 


1.74                        “Joint
Development Committee” or “JDC” shall have the meaning set forth in Section 2.3(a).


 


1.75                        “Joint
Finance Committee” or “JFC” shall have the meaning set forth in Section 2.5(a).


 


1.76                        “Joint
Inventions” means all Inventions that are jointly made during the Term by
at least one (1) PDL employee or person contractually required to assign
or license patent rights covering such inventions to PDL and at least one (1) Biogen
Idec employee or person contractually required to assign or license patent
rights covering such inventions to Biogen Idec.


 


1.77                        “Joint
Patent Committee” or “JPC” shall have the meaning set forth in Section 2.6(a).


 


1.78                        “Joint
Patent Rights” means all Patent Rights that claim or cover Joint Inventions.


 


1.79                        “Joint
Steering Committee” or “JSC” shall have the meaning set forth in Section 2.2(a).


 


1.80                        “Know-How”
means Inventions, discoveries, trade secrets, information, experience, data,
formulas, procedures, technology and results (whether or not patentable), which
at the time of use constitute Confidential Information, including discoveries,
formulae, materials including biological materials, practices, methods,
knowledge, know-how, processes, experience and test data (including physical,
chemical, biological, toxicological, pharmacological, clinical, and veterinary
data), dosage regimens, control assays, product specifications, analytical and
quality control


 


9

















 


data, marketing, pricing,
distribution cost and sales data or descriptions.


 


1.81                        “Losses”
shall have the meaning set forth in Section 15.1.


 


1.82                        “Manufacturing”
means any activities related to the manufacturing of a Collaboration Product or
Royalty Product, as the case may be, or any ingredient thereof, including
manufacturing process development, technology transfer, and scale-up,
establishment of manufacturing capacity, evaluation, qualification and
validation of manufacturing processes and facilities, manufacturing active
ingredients or supplies of such Product for Development, manufacturing such
Product for commercial sale, packaging, in-process and finished product
testing, release of product or any component or ingredient thereof, and quality
assurance activities related to manufacturing, ongoing stability tests and
regulatory activities related to any of the foregoing.


 


1.83                        “Manufacturing
Party” shall have the meaning set forth in Section 8.1.


 


1.84                        “Milestone
Indication” means  any Indication
as to which a separate Drug Approval Application is required for approval in a
jurisdiction. By way of example, (i) for ophthalmology Indications,
macular degeneration and diabetic retinopathy are two separate Milestone
Indications, (ii) with respect to autoimmune disease indications, Crohn’s
disease and ulcerative colitis are two separate Milestone Indications and (iii) with
respect to cancer Indications, “Milestone Indication” means a cancer of a
particular organ or any metastatic progression thereof, including as distinct
Milestone Indications, breast cancer, prostate cancer, colon cancer, rectal
cancer, ovarian cancer, uterine cancer, gastric cancer, bladder cancer, brain
cancer, bile duct cancer, pancreatic cancer, kidney cancer, stomach cancer,
head-and-neck cancer, esophageal cancer, liver cancer, and lung cancer.


 


1.85                        “MS” means
multiple sclerosis.


 


1.86                        “Net Sales”
shall have the meaning set forth in Exhibit C.


 


1.87                        “Non-Antibody
Product” means any pharmaceutical product having as an active ingredient
any synthetic molecule or biologic molecule other than an Antibody, including a
compound that has a molecular weight that is less than or equal to 1000
daltons, fusion protein (other than an Antibody), antisense molecule, siRNA,
nucleic acid, peptide, polypeptide (other than an Antibody) or fragment
thereof.


 


1.88                        “Non-Developing
Party” shall have the meaning set forth in Section 4.1(a).


 


1.89                        “North
American Territory” means the United States (including its possessions and
territories) and Canada.


 


1.90                        “Ongoing
Development Expense” shall have the meaning set forth in Exhibit C.


 


10

















 


1.91                        “Operating
Expenses” shall have the meaning set forth in Exhibit C.


 


1.92                        “Opt Out
Indications” shall have the meaning set forth in Section 4.1(b)(iii).


 


1.93                        “Other
Out-of-Pocket Costs” shall have the meaning set forth in Exhibit C.


 


1.94                        “Patent
Expenses” means the sum of all out-of-pocket expenses reasonably incurred
by a Party to prepare, file, prosecute and maintain PDL Target Patent Rights,
Biogen Idec Target Patent Rights and Joint Patent Rights, including the costs
of interferences/oppositions proceedings with respect to such Patent Rights,
provided in each case such expenses have been incurred in accordance with
Sections 12.4 and 12.5 and subject to Section 12.7 (b)(vii) below. In
addition, Patent Expenses shall include the costs of freedom to operate
searches and analyses with respect to Collaboration Products, to the extent
such searches or analyses have been authorized by the JPC and approved by the
JSC.


 


1.95                        “Patent Rights” means (a) all patents and patent
applications in any country or supranational jurisdiction, and (b) any
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates and the like, and any provisional
applications, of any such patents or patent applications.


 


1.96                        “PDL
Inventions” means all Inventions that (a) relate to or are useful with
any Antibody Product or Non-Antibody Product that are directed against or
incorporate a  Collaboration Target, (b) are
made during the Term by one or more employees of PDL or its Affiliates or
persons contractually required to assign or license patent rights covering such
inventions to PDL or its Affiliates, in the course of performing PDL’s
obligations, or exercising PDL’s rights, under this Agreement, and (c) are
not Joint Inventions.


 


1.97                        “PDL
Know-How” means all Know-How that is (a) Controlled by PDL or its
Affiliates at any time during the Term and (b) reasonably necessary or
useful for Biogen Idec to (i) perform its obligations under this
Agreement; or (ii) develop or commercialize a Collaboration Product or a
Royalty Product in the Field; provided that PDL Know-How shall not include methods
of manufacturing, production and test methods, procedures and batch records,
manufacturing and testing summary data, process and assay validation
information, designing, developing or preparing Antibodies including methods of
humanizing Antibodies, methods of reducing the immunogenicity of Antibodies,
methods of modifying effector function, and methods of increasing the affinity
or half-lives of Antibodies unless necessary for Biogen Idec to perform its
Development or Commercialization obligations or to exercise its rights
hereunder.


 


1.98                        “PDL
Patent Rights” means Patent Rights that claim  Technology Controlled by PDL or its
Affiliates at any time during the Term and that relate in whole or in part to
the Collaboration Targets or the manufacture, use or sale of Products. PDL


 


11

















 


Patent Rights shall not
include Joint Patents but shall include the Queen Patents and PDL Target Patent
Rights. As of the Effective Date, to PDL’s knowledge, all PDL Patent Rights are
listed on Exhibit A hereto.


 


1.99                        “PDL
Target Patent Rights” means Patent Rights that claim Technology Controlled
by PDL or its Affiliates at any time during the Term and that relate in
substantial part to the Collaboration Targets or the manufacture, use or sale
of Products. PDL Target Patent rights shall not include the Queen Patents.


 


1.100                 “PDL Technology”
means PDL Patent Rights and PDL Know-How.


 


1.101                 “Phase 1 Trial” means,
as to a specific pharmaceutical product, a well conducted and lawful study in
humans of the safety of such product, which is prospectively designed to
generate sufficient data (if successful) to commence a Phase 2 Trial (or
foreign equivalent) of such product, as further defined in Federal Regulation
21 C.F.R. 312.21(a), as amended from time to time, or the corresponding
regulation in jurisdictions other than the United States. A Phase 1 Trial shall
be deemed initiated upon the enrollment of the first patient.


 


1.102                 “Phase 2 Trial” means,
as to a specific pharmaceutical product, a well conducted and lawful study,
conducted anywhere in the world in diseased humans, of the feasibility, safety,
dose ranging and efficacy of such product, that is prospectively designed to
generate sufficient data (if successful) to commence a Phase 3 Trial (or
foreign equivalent) of such product, as further defined in 21 C.F.R. 312.21(b),
as amended from time to time, or the corresponding regulation in jurisdictions
other than the United States. For the avoidance of doubt, a Phase 2 Trial
requires enrollment of patients with the applicable disease or condition and is
aimed to provide a measure of efficacy in addition to short-term tolerability. A
Phase 2 Trial shall be deemed initiated upon the enrollment of the first
patient.


 


1.103                 “Phase 3 Trial” means,
as to a specific pharmaceutical product, a well conducted and lawful study in
humans performed to gain evidence of the efficacy of such product in a target
population, and to obtain expanded evidence of safety for such product that is
needed to evaluate the overall benefit-risk relationship of such product and
provide an adequate basis for physician labeling, as described in 21 C.F.R.
312.21(c), as amended from time to time, or the corresponding regulation in
jurisdictions other than the United States. A Phase 3 Trial shall be deemed
initiated upon the enrollment of the first patient.


 


1.104                 “Phase 4 Trial” means
any clinical trial in an Indication to be conducted after a Regulatory Approval
which was mandated by the applicable Regulatory Authority as a condition of
such Regulatory Approval.


 


1.105                 “Physician Group”
means a category of physicians and other medical professionals to whom one
or more Products is being Promoted, or will be Promoted if then-current
Development activities are successful. For purposes of this definition,
all  oncologists (without regard to
whether they treat a particular type or stage of cancer)


 


12

















 


shall be a single
Physician Group.


 


1.106                 “Post-Approval
Clinical Trial” shall have the meaning set forth in Exhibit C.


 


1.107                 “Product”
means [****].


 


1.108                 “Profit Sharing
Territory” means, with respect to a particular Product, those countries or
territories outside the Royalty Territory, if any, for such Product.


 


1.109                 “Promotion” or “Promote”
means the marketing and advertising of a Collaboration Product in the
relevant Field in the applicable territory in accordance with the relevant
Commercialization Plan, including medical education, information and
communication, market development and medical liaison activities, but not
including Detailing.


 


1.110                 “Queen Patents” means
those issued patents and patent applications Controlled by PDL that claim
priority under 35 USC §120 to U.S. Patent Application Serial No. [****].


 


1.111                 “Recipient” shall
have the meaning set forth in Section 14.2.


 


1.112                 “Regulatory
Approval” means, with respect to a particular regulatory jurisdiction, all
approvals (including pricing and reimbursement approvals), product and/or
establishment licenses, registrations or authorizations of any regional,
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the commercial sale of Products in such
regulatory jurisdiction.


 


1.113                 “Regulatory
Filings” means all applications, filings, dossiers and the like submitted
to a regulatory authority for the purpose of obtaining Regulatory Approval from
that regulatory authority. Regulatory Filings shall include all Drug Approval
Applications.


 


1.114                 “[****]” means
the [****] except to the extent such rights are later included within the scope
of this Agreement pursuant to Section 3.8.


 


1.115                 “Responsible
Commercialization Party” means the Party having the responsibilities set
forth in Article 6 for the execution and implementation of the
JSC-approved Commercialization Plan for the Commercialization of a particular
Collaboration Product, but excluding regulatory activities specifically
assigned to the Responsible Regulatory Party hereunder.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


13

















 


1.116                 “Responsible
Development Party” means the Party having the responsibilities set forth in
Article 3 for the execution and implementation of the JSC-approved
Development Plan for the Development of a particular Collaboration Product, but
excluding any regulatory or Manufacturing activities.


 


1.117                 “Responsible
Regulatory Party” means the Party having the responsibilities set forth in Article 5
for the execution and implementation of the regulatory activities set forth in
the JSC-approved Development Plan for a particular Collaboration Product.


 


1.118                 “[****]” means
[****].


 


1.119                 “[****]
Agreements” means (a) [****], and (b) [****].


 


1.120                 “ROW Territory” means
all parts of the Territory not included in the North American Territory or EU
Territory.


 


1.121                 “Royalty Product”
means (a) an Independent Product; (b) a Collaboration Product with
respect solely to any Independent Indication; or (c) with respect solely
to the ROW Territory, a Collaboration Product, an Independent Product or
Independent Indication.


 


1.122                 “Royalty
Territory” means, with respect to a particular Product, those countries or
territories in which such Product is a Royalty Product.


 


1.123                 “Sales Costs” shall
have the meaning set forth in Exhibit C.


 


1.124                 “Sales Returns &
Allowances” shall have the meaning set forth in Exhibit C.


 


1.125                 “Strategic Plan”
means, on a Collaboration Product-by-Collaboration Product basis, a written
document establishing, for such Collaboration Product, a specific multi-year
global strategic plan and budget.


 


1.126                 “Sublicensing
Revenues” means [****] approved pursuant to Section 3.7(c) [****].


 


1.127                 “Technology”
means any technical and other information, discoveries, inventions,
modifications, improvements, data, results, designs, formulae, ideas, analyses,
methods, techniques, assays, research plans, procedures, tests, processes
(including manufacturing processes, specifications and techniques), laboratory
records,


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


14

















 


chemical,
pharmacological, toxicological, clinical, analytical and quality control data,
reports, summaries, and information contained in submissions to, and
information from, regulatory authorities (in each case whether patentable or
not).


 


1.128                 “Term” shall
have the meaning set forth in Section 16.1.


 


1.129                 “Territory”
means all the countries of the world, and their territories and possessions.


 


1.130                 “Third Party” means
any person or entity other than a Party or its Affiliates.


 


1.131                 “Third Party
License” means (a) any of the license agreements set forth on Exhibit B
and (b) any license agreement entered into by a Party with a Third Party
after the Effective Date that the Parties (or the JSC, to the extent
authorized) agree in writing is necessary for the Development, Manufacture or
Commercialization of one or more Products in the applicable territory under
this Agreement.


 


1.132                 “Third Party
License Fees” shall mean license fees, royalties and other amounts incurred
by a Party under a Third Party License or in-license after the Effective Date.


 


1.133                 “Transplant Field”
means all indications that involve the suppression of rejection of
transplanted organs, bone marrow or other tissue, including, solid organ
transplantation (including tolerance induction and xenotransplantation), bone
marrow transplantation, graft versus host disease and cell transplantation.


 


1.134                 “Valid Claim”
means a claim in any (a) [****]; or (b) [****].


 


1.135                 “Volociximab
Product” means [****].


 


Any reference in this Agreement to an Article,
Section, subsection, paragraph, clause, Schedule or Exhibit shall be
deemed to be a reference to an Article, Section, subsection, paragraph, clause,
Schedule or Exhibit, of or to, as the case may be, this Agreement, unless
otherwise indicated. Unless the context of this Agreement otherwise requires, (a) words
of any gender include each other gender, (b) words such as “herein”, “hereof”,
and “hereunder” refer to this Agreement as a whole and not merely to the
particular provision in which such words appear, (c) words using the
singular shall include the plural, and vice versa, and (d) the words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “but not
limited to”, “without limitation”, “inter alia” or words of similar import.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


15

















 


ARTICLE 2



GOVERNANCE OF THE COLLABORATION


 


2.1                               Scope
of the Agreement. Pursuant and subject to the terms of this Agreement,
within the Field and the Territory, the Parties agree to engage in Development activities
with the goal of obtaining Regulatory Approval for Collaboration Products, as
soon as reasonably practicable. Each Party agrees, during the Term, to Develop
Collaboration Products only under the terms of this Agreement except as
contemplated under the terms of the [****] Agreements. The Parties’ intent is
to Develop Collaboration Products as expeditiously as reasonably practicable
with the resources and responsibilities allocated between the Parties on the
basis of each Party’s respective capabilities and availability of adequate
capacities. Unless otherwise specified in this Agreement, the guiding
principles to be followed by the Parties are attached hereto as Exhibit 2.1.


 


2.2                               Joint
Steering Committee.


 


(a)                                  Formation
and Purpose. As of the Effective Date, the Parties shall create a Joint
Steering Committee (the “JSC”) to
oversee the overall strategy of the Development and Commercialization of
Collaboration Products and carry out the functions described in this Section 2.2.
The purposes of the JSC shall be to provide overall strategic decision-making
and oversight of the Development and Commercialization of Collaboration
Products, including the development of a Strategic Plan, a [****] high-level
budget forecast and Approved Budget (consistent with the Development Plans to
be prepared pursuant to Section 3.3), oversight of the activities of the
Collaboration Committees, review of recommendations from the Collaboration
Committees regarding strategic and aggregate budget issues, allocation of
financial and other resources among collaboration projects, and resolution of
any matters not resolved by any other Collaboration Committee. The JSC shall
operate by the procedures set forth in this Section 2.2 and in Section 2.7.
The members of the JSC appointed by a party shall collectively exercise one
vote as to any matter upon which a vote is taken


 


(b)                                  Membership
of the JSC. Each Party shall designate representatives who are employees of
such Party or an Affiliate of such Party (not to exceed [****] for each Party)
with appropriate expertise to serve as members of the JSC. Each representative
may serve on more than one Committee as appropriate in view of the individual’s
expertise and may be substituted by another person with notice


 






*Certain information on this
page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


16

















 


to the other Party. Each
party may replace any or all of its representatives at any time upon prior
written notice to the other Party.


 


(c)                                  Specific
Responsibilities of the JSC. In addition to its general responsibilities
set forth in Section 2.2(a), the JSC shall, in particular:


 


(i)                                    prepare
and approve a Strategic Plan for the Collaboration and all Collaboration
Products, a [****] high-level budget forecast and an Approved Budget for the
Collaboration, and within such Approved Budget, make high-level budget
allocations among particular Development Programs. Such Strategic Plan will
guide the management of the Collaboration, and strategic decision-making
regarding Collaboration Products. The Strategic Plan shall be in a form to be
determined by the JSC (it being understood that the Parties will endeavor to
approve such Strategic Plan, [****] high-level budget forecast, and Approved
Budget within [****] following the Effective Date);


 


(ii)                                review
and approve the Development Plan and Commercialization Plan for each
Collaboration Product, and the Annual Workplans/Budget including any amendments
and revisions thereto, submitted to it by the JDC and JCC, respectively, as
soon as reasonably practicable after receipt thereof, but in no event later
than the dates specified in Section 3.3(c);


 


(iii)                            review
and approve decisions to terminate Collaborative efforts on Collaboration
Products, including with respect to specific Indications;


 


(iv)                               review
and approve decisions to proceed with the Development of any Future Products as
part of a Development Plan therefor;


 


(v)                                   establish
subcommittees pursuant to Section 2.7(c), oversee the activities of all
subcommittees so established, and address disputes or disagreements arising in
all such subcommittees;


 


(vi)                               attempt
to resolve disputes or disagreements arising in any other Collaboration
Committee or pursuant to Section 5.2(a);


 


(vii)                           review
and approve any changes in the Responsible Regulatory Party, the Responsible
Development Party, the Responsible Commercialization Party or the Manufacturing
Party, when and as necessary;


 


(viii)                       [****];
and


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


17

















 


(ix)                              perform
such other functions as the Parties may agree in writing or as otherwise
assigned by this Agreement.


 


(d)                                  Meetings
of the JSC. The JSC shall meet at least twice every calendar  year, on such dates and at such times as agreed to by PDL
and Biogen Idec, with all scheduled in-person meetings to alternate between
Fremont, California and a Biogen Idec site to be designated by Biogen Idec
prior to such meeting, or at other locations as determined by the JSC. In
addition, either Party may convene a special meeting of the JSC by no less than
ten (10) business days’ prior written notice. Meetings may be held by
audio or video conference with the consent of each Party, provided that at
least one (1) meeting per calendar year shall be held in person.
Additional representatives or consultants may from time to time, by mutual
consent of the Parties, be invited to attend JSC meetings, subject to such
representative’s or consultant’s written agreement to comply with the
requirements of this Agreement. Each Party shall be responsible for its own
expenses for participating in the JSC. Meetings of the JSC shall be effective
only if at least three (3) representatives of each Party are present or
participating.


 


2.3                               Joint
Development Committees.


 


(a)                                  Formation
and Purpose. Within thirty (30) days after the Effective Date, the Parties
shall create a Joint Development Committee (the “JDC”)
for each Development Program to oversee the Development of the Existing
Products in such program. In addition, within thirty (30) days after a decision
by the JSC to Develop a Future Product, the JSC shall decide whether to create
a JDC to oversee the Development of such Future Product hereunder or include
such Development within the scope of an existing JDC. The purposes of each JDC
shall be to (i) review and recommend to the JSC Development Plans and
Annual Workplan/Budgets prepared by the Responsible Development Party for its
particular Collaboration Products and (ii) monitor and facilitate, as
necessary, the implementation of the Development Plans by the Parties. Each JDC
shall operate by the procedures set forth in this Section 2.3 and in Section 2.7.


 


(b)                                  Membership
of the JDC. Each Party shall designate representatives who are employees of
such Party or an Affiliate of such Party (not to exceed six (6) for each
Party) with appropriate expertise to serve as members of each JDC. Each Party
shall include representatives from the functions for which it is the
Responsible Party. Each representative may serve on more than one Committee as
appropriate in view of the individual’s expertise and may be substituted by
another person with notice to the other Party. Each party may replace any or
all of its representatives at any time upon prior written notice to the other
Party.


 


(c)                                  Specific
Responsibilities of the JDC. In addition to its general responsibilities
set forth in Section 2.3(a), the JDC shall, in particular:


 


(i)                                    consult
with the Responsible Development Party on its preparation of a Development Plan
and the Annual Workplans/Budget for each


 


18

















 


Collaboration Product,
including with respect to budgets, clinical trial strategy, Regulatory Approval
requirements and clinical supply requirements;


 


(ii)                                review
and recommend to the JSC for approval each Development Plan as soon as
reasonably practicable after receipt thereof, but in no event later than the
dates specified in Section 3.3(c);


 


(iii)                            review
and recommend to the JSC for approval the Annual Workplan/Budget proposed by
the Responsible Development Party as soon as reasonably practicable after
receipt thereof, but in no event later than the dates specified in Section 3.3(c);


 


(iv)                               review
changes to the Development Plan proposed by the Responsible Development Party
and recommend to the JSC for approval as soon as reasonably practicable after
receipt thereof, but in no event later than the dates specified in Section 3.3(c);


 


(v)                                   establish
subcommittees pursuant to Section 2.7(c), oversee the activities of all
subcommittees so established, and address disputes or disagreements arising in
all such subcommittees;


 


(vi)                               present
disputes not resolvable by the JDC to the JSC for resolution; and


 


(vii)                           perform
such other functions as the Parties may agree in writing or as otherwise
assigned by this Agreement.


 


(d)                                  Meetings
of the JDC. The JDC shall meet as frequently as members of the JDC
determine is required (but in no event, less frequently than once every month
during the first six (6) months following the Effective Date and once
every Calendar Quarter thereafter), on such dates and at such times as agreed
to by PDL and Biogen Idec, with all scheduled in-person meetings to alternate
between a PDL site and a Biogen Idec site as designated by the respective Party
prior to such meeting prior to such meeting, or at other locations as
determined by the JDC. Meetings may be held by audio or video conference with
the consent of each Party, provided that at least two (2) meetings per
calendar year shall be held in person. Additional consultant’s or
representatives may from time to time, by mutual consent of the Parties, be
invited to attend JDC meetings, subject to such consultant’s or representative’s
written agreement to comply with the requirements of this Agreement. Each Party
shall be responsible for its own expenses for participating in each JDC. Meetings
of the JDC shall be effective only if more than one-half of the representatives
of each Party are present or participating.


 


2.4                               Joint
Commercialization Committees.


 


(a)                                  Formation
and Purpose. The Parties shall form a Joint Commercialization Committee
(the “JCC”) for such Collaboration Product to
oversee the Commercialization thereof not later than the date that is six (6) months
prior to the


 


19

















 


anticipated commencement
of the first Phase 3 Trial with respect to a Collaboration Product or such
earlier date as the JSC may determine. The purpose of each JCC shall be to (i) review
and recommend to the JSC Commercialization Plans prepared by the Responsible
Commercialization Party for its particular Collaboration Products and (ii) monitor
and facilitate, as necessary, the implementation of such Commercialization
Plans by the Parties. Each JCC shall operate by the procedures set forth in
this Section 2.4 and in Section 2.7.


 


(b)                                  Membership
of the JCC. Each Party shall designate representatives who are employees of
such Party or an Affiliate of such Party (not to exceed three (3) for each
Party) with appropriate expertise to serve as members of each JCC. Each Party
may replace any or all of its representatives at any time upon prior written
notice to the other Party. Each representative may serve on more than one
Committee as appropriate in view of the individual’s expertise and may be
substituted by another person with notice to the other Party.


 


(c)                                  Specific
Responsibilities of the JCC. In addition to its general responsibilities
set forth in Section 2.4(a), the JCC shall, in particular:


 


(i)                                    promptly
following the formation of each JCC, develop and recommend to the JSC a
Strategic Plan for the Commercialization of the applicable Collaboration
Product prior to the submission by the Responsible Commercialization Party of a
Commercialization Plan for such Product;


 


(ii)                                consult
with the Responsible Commercialization Party on its preparation of a
Commercialization Plan for each Collaboration Product, including budgets to be
included therein;


 


(iii)                            review
and recommend to the JSC for approval each annual Commercialization Plan as
soon as reasonably practicable after receipt thereof, but in no event later
than the dates specified in Section 3.3(c);


 


(iv)                               review
changes to the Commercialization Plan proposed by the Responsible
Commercialization Party and recommend to the JSC for approval as soon as
reasonably practicable after receipt thereof, but in no event later than the
dates specified in Section 3.3(c);


 


(v)                                   review
initial Collaboration Product launch concepts for such Collaboration Product
Promotional material prior to the creation and use thereof;


 


(vi)                               serve
as a forum for discussion of issues presented by a Party with respect to the
Commercialization of Collaboration Products;


 


(vii)                           establish
subcommittees pursuant to Section 2.7(c), oversee the activities of all
subcommittees so established, and address disputes or disagreements arising in
all such subcommittees;


 


(viii)                       present
disputes not resolvable by the JCC to the JSC for


 


20

















 


resolution; and


 


(ix)                              perform
such other functions as the Parties may agree in writing or as otherwise
assigned by this Agreement.


 


(d)                                  Meetings
of the JCC. The JCC shall meet as frequently as members of the JCC
determine is required (but in no event, less frequently than once every
Calendar Quarter), on such dates and at such times as agreed to by PDL and
Biogen Idec, with all scheduled in-person meetings to alternate between a PDL
site and a Biogen Idec site as designated by the respective Party prior to such
meeting, or at other locations as determined by the JCC. Meetings may be held
by audio or video conference with the consent of each Party, provided that at
least two (2) meetings per calendar year shall be held in person.
Additional representatives or consultants may from time to time, by mutual
consent of the Parties, be invited to attend JCC meetings, subject to such
representative’s or consultant’s written agreement to comply with the
requirements of this Agreement. Each Party shall be responsible for its own
expenses for participating in each JCC. Meetings of each JCC shall be effective
only if more than one-half of the representatives of each Party are present or
participating.


 


2.5                               Joint
Finance Committee.


 


(a)                                  Formation
and Purpose. Within thirty (30) days after the Effective Date, the Parties
shall create a single Joint Finance Committee (the “JFC”)
for the Collaboration. The JFC shall operate under the direction of the JSC to
provide services to and consult with the JDC and the JCC in order to address
the financial, budgetary and accounting issues that arise in connection with
the Development Plans and updates thereto as described in Exhibit C, as
well as Commercialization Plans and updates thereto. Additionally, the JFC will
lead the economic analysis to help drive decisions on future Collaboration
investments, and lead the reporting and reconciliation processes outlined in Exhibit C.
The JFC shall operate by the procedures set forth in this Section 2.5 and
in Section 2.7.


 


(b)                                  Membership
of the JFC. Each Party shall designate two (2) employees of such Party
or an Affiliate of such Party. Each Party may replace any or all of its
representatives at any time upon prior written notice to the other Party. Such
representatives will include individuals with expertise and responsibilities in
the areas of accounting, cost allocation, budgeting and financial reporting. Each
representative may serve on more than one Committee as appropriate in view of
the individual’s expertise.


 


(c)                                  Meetings
of the JFC. The JFC shall meet as frequently as members of the JSC
determine is required (but in no event, less frequently than twice every
calendar year), on such dates and at such times as agreed to by PDL and Biogen
Idec, with all scheduled in-person meetings to alternate between a PDL site and
a Biogen Idec site as designated by the respective Party prior to such meeting,
or at other locations as determined by the JFC. All meetings shall be held in
person or by audio or videoconference. Additional representatives or
consultants may from time to time, by mutual consent of the Parties, be invited
to attend JFC meetings, subject to such


 


21

















 


representative’s or
consultant’s written agreement to comply with the requirements of this
Agreement. Each Party shall be responsible for its own expenses for
participating in the JFC. Meetings of the JFC shall be effective only if all
representatives of each Party are present or participating.


 


2.6                               Joint
Patent Committee.


 


(a)                                  Formation
and Purpose. Within thirty (30) days after the Effective Date, the Parties
shall create a single Joint Patent Committee (the “JPC”)
for the Collaboration. The purposes of the JPC shall be to prepare, file and
prosecute the PDL Patent Rights, the Biogen Idec Patent Rights and the Joint
Patent Rights, as described in and subject to the terms of Article 12. The
JPC shall operate by the procedures set forth in this Section 2.6 and in Section 2.7.


 


(b)                                  Membership
of the JPC. Each Party shall designate an employee of such Party or an
Affiliate of such Party with appropriate expertise to serve as members of the
JPC. Each Party may replace any or all of its representatives at any time upon
prior written notice to the other Party. Each representative may serve on more
than one Committee as appropriate in view of the individual’s expertise.


 


(c)                                  Specific
Responsibilities of the JPC. In addition to its general responsibilities
set forth in Section 2.6(a), the JPC shall, in particular be responsible
for:


 


(i)                                    Managing
continued prosecution of the PDL Patent Rights, the Biogen Idec Patent Rights
and the Joint Patent Rights as described and in accordance with the terms of Article 12;


 


(ii)                                Reviewing
invention disclosures and publications in accordance with the terms of Article 12
and Section 14.3;


 


(iii)                            Reviewing
and managing licensing, enforcement activities and conflicts involving
intellectual property rights to the extent provided in Article 12;


 


(iv)                               Providing
advice, periodic updates and reports to the JSC regarding intellectual property
matters;


 


(v)                                   Using
reasonable efforts to provide a freedom to operate analysis relating to
Collaboration Products prior to the Phase 2 Trial completion;


 


(vi)                               Using
good faith efforts to keep the Parties informed as to material developments
with respect to the prosecution of, and any adversarial proceedings involving
intellectual property rights, to the extent a Party’s representative on the JPC
concludes that such prosecution or proceeding directly affects a Collaboration
Product; and


 


(vii)                           Performing
such other functions as the Parties may agree in writing or as otherwise assigned
by this Agreement.


 


22

















 


(d)                                  Meetings
of the JPC. The JPC shall communicate on such dates and at such times as
agreed upon by its members but in no event, less frequently than once every
other Calendar Quarter. Meetings may be held by audio or video conference with
the consent of each Party, provided that at least two (2) meetings per
calendar year shall be held in person with all scheduled in-person meetings to
alternate between a PDL site and a Biogen Idec site as designated by the
respective Party prior to such meeting, or at other locations as determined by
the JPC. Each Party may permit visitors to attend meetings of the JPC. Each
Party shall be responsible for its own expenses for participating in the JPC. Meetings
of the JPC shall be effective only if the representative of each Party is
present or participating.


 


(e)                                  Decisions;
Actions Without Meetings. Subject to Article 12 below, any approval,
determination or other action of the JPC shall require unanimous agreement of
both members of the JPC. In the event that a decision can not be reached by the
JPC, then the matter shall be referred to the respective senior management of
the in-house legal department of each Party. In the event such senior management
is unable to resolve the matter, then the matter will be resolved pursuant to Section 2.8
(b) and (c) and Article 17. Unless otherwise agreed by the
Parties, decisions of the JPC shall be determined in a manner designed to
ensure a reasonable scope of protection for the PDL Patent Rights, the Biogen
Idec Patent Rights and the Joint Patent Rights, to obtain broad patent
protection for Collaboration Products and to strengthen the Parties’ ability to
broadly protect and enforce such Patent Rights against infringers within the
scope of Collaboration Products.


 


2.7                               General
Committee Procedures.


 


(a)                                  Chairperson.
Each Collaboration Committee will be led by a representative of one of the
Parties (the “Chairperson”), appointed as
follows:  [****] shall select from its
representatives a Chairperson for each of the Committees for the period
commencing on the Effective Date and ending on [****] and [****] shall select
from its representatives a Chairperson for each of the Committees for the
period commencing on [****] and ending on [****]. Thereafter, selection of the
Chairperson for each of the Committees will [****].


 


(b)                                  Responsibilities.
The Chairperson shall have only those responsibilities set forth in this Section 2.7(b).
The Chairperson of each Collaboration Committee shall be responsible for
calling meetings, preparing and circulating an agenda in advance of each
meeting of such Collaboration Committee, provided, that a Chairperson shall
call a meeting of the applicable Collaboration Committee promptly upon the
written request of either Party to convene such a meeting. In addition, each


 






*Certain information on this page has been omitted and filed
separately with the commission. Confidential treatment has been requested with
respect to the omitted portions.


 


23

















 


Chairperson shall bear
the responsibility for preparing written draft minutes of that Collaboration
Committee’s meetings in reasonable detail and for distributing such draft
minutes to all members of that Collaboration Committee for comment and review
within [****] after the relevant meeting. The members of the Collaboration
Committee shall have [****] to provide comments. Each Chairperson shall
incorporate timely received comments and distribute revised minutes to all
members of that Collaboration Committee for their final review and approval
within [****] after the relevant meeting.


 


(c)                                  Subcommittees.
From time to time, each Committee may establish and delegate duties to
other committees or sub-committees on an “as-needed” basis to oversee
particular projects or activities. Each such subcommittee shall be constituted
and shall operate as the JSC, JDC, JCC, JFC or JPC, as the case may be,
determines; provided, that each Party shall have the right to equal
representation on any such subcommittee. Subcommittees may be established on an
ad hoc basis for purposes of a specific project for the life of a Collaboration
Product, or on such other basis as the applicable Committee may determine. Each
subcommittee and its activities shall be subject to the oversight, review and
approval of, and shall report to, the Committee that established such
subcommittee. In no event shall the authority of the subcommittee exceed that
specified for the relevant Committee in this Article 2.


 


(d)                                  Limitations
of Committee Powers. Each Committee shall have only such powers as are
specifically delegated to it hereunder and shall not be a substitute for the
rights of the Parties. Without limiting the generality of the foregoing, no
Committee shall have any power to amend this Agreement. Any amendment to the
terms and conditions of this Agreement shall be implemented pursuant to Section 18.3
below.


 


(e)                                  Authority.
The Parties agree that, in voting on matters as described in this Article 2,
it shall be conclusively presumed that each voting member of the JSC or other
Committee has the authority and approval of such member’s respective senior
management in casting his or her vote.


 


2.8                               Committee
Decision-Making.


 


(a)                                  Consensus;
Good Faith; Action Without Meeting. Subject to the terms of this Section 2.8,
each Committee will take action by [****], assuming a quorum for such Committee
is present. Consistent with Exhibit 2.1, the members of each Committee
shall act in good faith to cooperate with one another to reach agreement with
respect to issues to be decided by the Committee. Action that may be taken at a
meeting of a Committee also may be taken without a meeting if a written


 






*Certain information on this page has been omitted and filed
separately with the commission. Confidential treatment has been requested with
respect to the omitted portions.


 


24

















 


consent setting forth the
action so taken is signed by all of the Committee representatives of each
Party.


 


(b)                                  Failure
to Reach Consensus by a Collaboration Committee. If a Collaboration
Committee is unable to reach [****] within [****] of its initial consideration
of any matter over which such Committee has authority and responsibility, then
the Committee shall escalate the matter to the JSC for decision; provided, that
such Committee may escalate the matter to the JSC prior to the expiration of
such [****] with the consent of both Parties.


 


(c)                                  [****]:


 


(i)                                    With
respect to any [****] shall [****] with respect to all matters, except as
described below in clause (ii) and (iv) and provided that [****];


 


(ii)                                Each
Party shall possess final decision-making authority with respect to
Manufacturing processes during the time that such Party is the Manufacturing
Party under this Agreement, but for avoidance of doubt in each case, such
authority does not include the ability to terminate Manufacturing of a Product
in contravention of the terms of any Clinical Supply arrangement or a
Commercial Supply Agreement or to unilaterally alter the terms of any Clinical
Supply arrangement or Commercial Supply Agreement including quantities or
forecasts.


 


(iii)                            [****].


 


(iv)                               [****].


 


2.9                               Compliance
with [****] Agreements. PDL shall have no obligation to act in any way that
would breach its obligations under the [****] Agreements.


 


2.10                        [****].


 


ARTICLE 3



DEVELOPMENT OF COLLABORATION PRODUCTS


 


3.1                               Overview.
The Collaboration between the Parties is divided into three Development
Programs, one for each Collaboration Target. This Article 3 describes the
rights and obligations of the Parties with respect to the Development of
Collaboration Products within the various Development Programs, including both
Existing Products and Future Products.


 






*Certain information on this page has been omitted and filed
separately with the commission. Confidential treatment has been requested with
respect to the omitted portions.


 


25














 


3.2                               Responsible
Development Party. Subject to the roles of the various Collaboration
Committees described in Article 2, the allocation of primary
responsibility for the creation of Development Plans and the implementation of
Development activities of Collaboration Products described in such Development
Plans shall be given to the Responsible Development Party. The allocation of
such responsibilities shall be as follows: 


 


	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  North
  American Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  EU
  Territory and ROW Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 


3.3                               Development
Plan.


 


(a)                                  Scope.
All  Development of Collaboration Products
shall be conducted pursuant to a Collaboration Product specific, multi-year,
global development plan and budget (in each case, a “Development
Plan”), which shall set forth all anticipated Development activities
and timelines, allocate responsibility for carrying out such activities between
PDL and Biogen Idec and include an associated [***] development budget with
respect to each such Collaboration Product, plus a forecast of the total,
multi-year costs of any clinical trials included within such plan. Primary
responsibility for developing and implementing each such Development Plan shall
reside with the Responsible Development Party for its respective Collaboration
Product. The non-Responsible Development Party will have the right to consent
to any Development activities assigned to such Party under the terms of a
Development Plan. The initial draft Development Plans, including the Initial
Development Program Budget, for the Existing Products are attached hereto as Exhibit 3.3.
The Parties intend that the draft Development Plans attached in Exhibit 3.3
will serve as the Development Plans until first Development Plans are prepared
and approved pursuant to Section 3.3(b).


 


(b)                                  Development
Plan and First Annual Workplan/Budget. The Responsible Development Party
shall in consultation with the relevant JDC pursuant to Section 2.3(c)(i) prepare
a Development Plan for each Existing Product as soon as practicable following
the Effective Date, and each such Development Plan, when


 






*Certain information on this page has been omitted and filed
separately with the commission. Confidential treatment has been requested with
respect to the omitted portions.


 


26

















 


approved, shall supersede
the applicable draft Development Plan attached as Exhibit 3.3. The
Responsible Development Party will also prepare a draft of an Annual
Workplan/Budget for [****] after consultation with the relevant JDC, specifying
in detail the Development activities to be performed during the year,
designation of which Party is responsible for each task, staffing levels (which
levels shall be reasonably necessary for the attainment of the Development
goals, as applicable), any approved use of Third Party contractors required to
carry out such activities, a budget setting forth the estimated expenditures
required to carry out such activities and a timeline for completion of such
activities. Such draft will be prepared as soon as practicable following the
Effective Date.


 


(c)                                  Yearly
Updates and Subsequent Annual Workplan/Budget. The Responsible Development
Party shall, on an annual basis, update the Development Plan to reflect any
changes necessary given the progress and the results of the Development work as
of such date or any change in strategy, timelines, or long range plans going
forward. In addition, prior to the start of each year, the Responsible
Development Party shall prepare an Annual Workplan/Budget which shall specify
in detail the Development activities to be performed during such year,
designation of which Party is responsible for each task, staffing levels (which
levels shall be reasonably necessary for the attainment of the Development
goals, as applicable), any approved use of Third Party contractors required to
carry out such activities, a budget setting forth the estimated expenditures
required to carry out such activities, a timeline for completion of such
activities and annual production requirements, as specified in Section 8.2.
Each update to the Development Plan and adoption of each Annual
Work-plan/Budget under this paragraph and any modifications and updates under paragraph
(d) below shall automatically be deemed to constitute an amendment to the
Development Plans upon JSC approval and ratification of the meeting minutes
related thereto, and shall not constitute an obligation of either Party until
such approval and ratification. The schedule for yearly updates to the
Development Plan and the drafting and approval of each Annual Workplan/Budget
commencing with the calendar year [****], shall occur no later than the dates
set forth below:


 


	
  EVENT

  	
   

  	
  TIMING

  
	
  [****]

  	
   

  	
  [****]

  
	
  [****]

  	
   

  	
  [****]

  
	
  [****]

  	
   

  	
  [****]

  
	
  [****]

  	
   

  	
  [****]

  



 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


27

















 


(d)                                  Interim
and Annual Workplan/Budget Modifications and Updates. The Responsible
Development Party shall review each Annual Workplan/Budget on a [****] during
the course of each year to review actual activities and expenditures compared
to plan and to determine if any changes are necessary given the progress and
the results of the Development work as of such date. Other interim
modifications to each Annual Workplan/Budget during the course of the year may
also be adopted by the Responsible Development Party, as necessary, but shall
be subject to the approval of the JSC if material. All changes to any Annual
Work-plan/Budget shall be subject to review and approval of the JSC where such
modifications exceed the authority delegated to the Responsible Development
Party by the JSC or under this Agreement.


 


3.4                               Standards
of Conduct; Diligence.


 


(a)                                  Each
Party shall perform the Development activities for which it is responsible
under the Development Plan in good scientific manner and in compliance with
applicable laws, rules and regulations. Each Party will keep the other
Party fully informed regarding the progress and results of such Party’s
Development activities with respect to the Collaboration Products through the
Collaboration Committee meetings.


 


(b)                                  Each
Party shall use Diligent Efforts to execute and carry out the activities
assigned to it in the Development Plan within each Annual Workplan/Budget; [****].


 


(c)                                  The
Parties shall cooperate in good faith to establish appropriate and consistent
medical information support relating to Collaboration Products.


 


3.5                               Shared
Development Expenses.


 


(a)                                  Payment
of Development Expenses. Subject to a Party’s right to opt out as set forth
in Article 4, all Development Expenses or Other Out of Pocket Costs shall
be shared between Biogen Idec and PDL as provided below and in accordance with Exhibit C,
so that Biogen Idec bears fifty percent (50%) of such costs and PDL bears fifty
percent (50%) of such costs, provided that such costs were part of an Annual
Workplan/Budget, or were incurred pursuant to the draft Development Plans
attached as Exhibit 3.3 prior to approval of a Development Plan under Section 3.3(b),
or were otherwise approved by the JSC. There shall be a Reconciliation
Statement, prepared by the Responsible Development Party as set forth in Section A.2.2
of Exhibit C, of such costs which are to be shared and which are incurred
during a reporting period by each Party, in accordance with Section A.2.2
of Exhibit C, with a payment by one Party to the other, pursuant to Section A.5
of Exhibit C, to the extent necessary so that each Party bears its
appropriate percentage of such shared Development Costs. [****].  


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


28

















 


(b)                                  Development
Cost Accounts. Subject to the limitations set forth in Section 3.6,
each Party shall charge all Development Expenses or Other Out-of –Pocket Costs
so incurred by it or its Affiliates on its books and records to enable the
tracking of expenses incurred in connection with each Development Plan and each
Annual Workplan/Budget (each, a “Development Cost Project
Account”). Within [****] after the end of each Calendar Quarter,
each Party shall submit to the other Party a written summary of all expenses
charged to its Development Cost Project Account during such Calendar Quarter,
which summary shall be accompanied by reasonable supporting documentation for
such expenses. Each Party shall provide the other Party with interim [****]
reports of [****] estimates of current Calendar Quarter charges within [****]
after the end of [****] in a Calendar Quarter (other than the [****], for which
only a quarterly report will be due).


 


3.6                               Excluded
Development Expenses. Notwithstanding the terms of Section 3.5, [****]
will bear any [****], incurred by the Parties primarily in connection with the
Development of any and all Royalty Products for approval and sale in the ROW
Territory.


 


3.7                               Third
Parties.


 


(a)                                  Contractors.
Any Third Party retained by a Party to perform Development activities must
be approved in advance in writing by the other Party, unless such Third Party
is specifically named in a Development Plan. Each Party shall remain liable for
the performance of its obligations hereunder which it delegates to such Third
Parties. Any Third Parties performing Development activities hereunder shall be
subject to confidentiality and non-use obligations at least as stringent as
those set forth in Article 14 and must comply with the terms of Article 12.


 


(b)                                  Intellectual
Property. The Parties intend not to knowingly introduce to any
Collaboration Product any Technology that is not Controlled by a Party, except
with the prior approval of the JPC and the JSC. If the JSC in consultation with
the JPC determines that a license to certain Third Party technology is
reasonably necessary to advance the successful Development of a Collaboration
Product, then the JSC shall [****]. Upon approval of the terms of such Third
Party license, the [****] may execute such Third Party license and any payments
that become due pursuant to a Third Party License agreement executed pursuant
to this Section 3.7(b) will, during the course of Development of the
applicable Collaboration Products, be treated as [****].


 


(c)                                  Sublicensing.
The JSC may elect to license the further Development or Commercialization
of a Collaboration Product to a Third Party in one or more Indications and/or
territories. In such event, the JSC shall designate a Party to negotiate the
terms on which such a Third Party license would be granted and to serve


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


29

















 


as the primary point of
contact with the applicable Third Party sublicensee following the execution of
the license agreement, provided that the JSC may condition approval of such
sublicense upon submission of the final agreement with the Third Party to the
JSC for final approval. The parties acknowledge that any grant of rights to a
distributor shall not constitute a license of Development or Commercialization
rights hereunder.


 


3.8                               [****].
If, after the Effective Date,  [****]. If the
Parties fail to agree on the payment and other terms under which such [****]
would be included within this Agreement prior to the termination of the
Negotiation Period, then such [****] shall not be included within the scope of
this Agreement and [****] shall have no further obligation to [****] in respect
of such rights except as set forth in this Section 3.8. If the Parties
were unable to execute an agreement prior to the termination or expiration of
the Negotiation Period, [****] will not, for a period of [****] from the
termination or expiration of the Negotiation Period, enter into a license or
other agreement with a Third Party providing for the development or
commercialization of such [****] on terms which are in the aggregate less
favorable to [****] than the last bona fide offer made in writing by [****] to [****]
without first offering to [****] for a period of [****] the right to include
the [****] within the scope of this Agreement upon such alternative terms.


 


3.9                               Development
of Products in the ROW Territory.


 


(a)                                  Responsibility.
Biogen Idec shall be solely responsible, at its sole cost and expense and at
its sole discretion, for the Development of any Royalty Product in the ROW
Territory. Biogen Idec shall use Diligent Efforts in proceeding with the
development and registration of Royalty Products in Japan.


 


(b)                                  Updates.
Biogen Idec will inform PDL of the status of Biogen Idec’s Development and
Commercialization of Royalty Products in the ROW Territory through [****]
progress reports submitted in writing to PDL. In addition, upon reasonable
notice to Biogen Idec, it will provide PDL with copies of any information or
data reasonably requested by PDL and reasonably necessary for the development
or commercialization of Royalty Products. Through the JSC, Biogen Idec shall
advise and consult with PDL with respect to any significant issues or questions
raised by any regulatory authorities in the ROW Territory with respect to a
Royalty Product that Biogen Idec believes would have an adverse impact on the
corresponding Collaboration  Product in
the Profit Sharing Territory.


 


(c)                                  Regulatory
Cross-Referencing. Biogen Idec will allow the Responsible Regulatory Party
in a Territory to cross-reference, in furtherance of JSC-approved activities
under this Agreement, Biogen Idec regulatory filings and clinical data


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


30

















 


with respect to any
Royalty Product developed or commercialized by Biogen Idec in the ROW Territory
and will grant PDL reasonable access during normal business hours to such
regulatory filings and clinical data.


 


3.10                        Consideration
of Future Products and Additional Indications or New Formulations of
Collaboration Products; Scope and Exclusivity


 


(a)                                  Future
Products Brought to Joint Steering Committee


 


(i)                                    From
time to time during the Term, the JSC shall consider proposals that the Parties
jointly Develop and Commercialize any (A) new Product as a Future Product
in accordance with the terms of this Agreement; (B) additional Indication
for an existing Collaboration Product; or (C) new formulation of an
existing Collaboration Product.


 


(ii)                                Either
Party may initiate the foregoing proposal at any time during the Term. In
addition, the Parties must initiate a proposal with respect to a Product under
the circumstances discussed below. A Party initiating a proposal under this Section 3.10
shall be deemed a “Proposing Party.”


 


(1)                                 A
Party must bring a proposal to the JSC that the Parties Collaborate on [****]
at the following times:


 


(a)                                  With
respect to a [****], prior to negotiation of such license; or


 


(b)                                  With
respect to all other Products that are [****], after the Proposing Party has
performed Development on such Product, [****];


 


(2)                                 PDL
must [****] at the following times:


 


(a)                                  With
respect to a [****]; or


 


(b)                                  With
respect to all other Products that are [****], after PDL has performed
Development on such Product, [****];


 


(b)                                  Consequences
of JSC Consideration of Future Products and Additional Indications or New Formulations
of Collaboration Products


 


(i)                                    Full
Approval. If the JSC approves the addition of a new Product as a Future
Product or an additional Indication for an existing Collaboration Product or a
new formulation of an existing Collaboration Product, then such Product


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


31

















 


shall be a Collaboration
Product and the JSC shall appoint a Responsible Development Party that shall
create a new Development Plan for such Collaboration Product or update the
applicable Development Plan to include the Development activities to be
performed by the Parties in the case of an additional Indication for or new
formulation of an existing Collaboration Product. The JSC will take into
consideration a Party’s current abilities, expertise and infrastructure when
appointing new Responsible Development Parties and will make such appointments
accordingly. The Responsible Development Party for each such Collaboration
Product shall implement such Development activities as contemplated by this Article 3.
Any such Development Plan or update shall be prepared and approved in
accordance with the provisions of Articles 2 and 3.


 


(ii)                                Partial
Approval. If, after a proposal is made under Section 3.10(a), the JSC
does not approve the addition of a new Product as a Future Product or an
additional Indication for an existing Collaboration Product or a new
formulation of an existing Collaboration Product, but determines that such
Product or additional Indication or formulation should be subject to further
evaluation then such Product or additional Indication or formulation shall be subject
to this Section 3.10(b)(ii). At the request of the Proposing Party, the
JSC shall develop a proposed work plan, which shall include specific goals
(such as a clinical trial, with primary endpoints) for such Product or
additional Indication or formulation and the Proposing Party shall provide all
information reasonably requested by the JSC that would be material to making a
determination as to whether such proposed work plan should be approved and to
the appropriateness of the proposed goals. If the JSC agrees that if the
specific goals set forth in work plan are met, the Indication, formulation or
new Product would become a Collaboration Product, then the following shall
apply:


 


(1)                                 The
Proposing Party shall have the right to undertake the work specified in the
work plan at its own expense;


 


(2)                                 If
the Proposing Party carries out the work plan and meets all of the JSC-approved
specific goals, then


 


(a)                                  the
other Party shall reimburse the Proposing Party an amount equal to [****] of
the Development Expenses related to such trial that such Party would have
otherwise been responsible for if the JSC had approved such trial as part of
the Development Plan,  and


 


(b)                                  the
formulation, Indication or new Product shall be developed jointly by the
Parties and the JSC shall take the actions described in Section 3.10(b) in
respect of such new Collaboration Product or additional Indication or new
formulation of an existing Collaboration Product.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


32

















 


(3)                                 If
the JSC-approved specific goals are not met, the Proposing Party shall be
solely responsible for all related costs without the right of reimbursement
from the other Party and neither Party will be allowed to continue development
except in the following circumstances:


 


(a)                                  If
[****] is the Proposing Party, it may [****];


 


(b)                                  If
[****] is the Proposing Party [****] it may [****].


 


For purposes of clarity,
the Parties agree that if the JSC is unable to agree on the specific goals for
the foregoing work plan or is unable to agree that if the work plan meets its
goals the Parties would jointly Develop the new product as a Future Product or
an additional clinical indication for an existing Collaboration Product or a
new formulation of an existing Collaboration Product, such disagreement shall
not be subject to dispute resolution hereunder and shall be considered final.


 


(iii)                            No
Approval. If, after a proposal is made under Section 3.10(a), the JSC
does not approve the addition of a new Product as a Future Product or an
additional Indication for an existing Collaboration Product or a new
formulation of an existing Collaboration Product, and does not determine that
such Product or additional Indication or formulation should be subject to
further evaluation, [****] except in the following circumstances, and provided
that the Proposing Party did not block the approval of any such proposal:


 


(1)                                 If
[****] is the Proposing Party, it may [****];


 


(2)                                 If
[****] is the Proposing Party [****], it may [****].


 


Any such Product which is permitted to be pursued
outside the Collaboration shall not be subject to the terms, obligations,
rights and responsibilities in this Agreement.


 


(c)                                  Lapse
of Obligations [****]. The obligations to propose [****] under this Section 3.10
shall lapse as to any [****].


 


3.11                        Transfer
of Materials. During the Term, the Parties anticipate that each Party will
transfer certain of its proprietary tangible research materials to the other
Party. Each Party agrees during the Term that it will use such materials of the
other Party only for the purposes set forth in this Agreement, and will not
transfer such materials to any Third Party, except in compliance with Section 14.1
and Section 14.2 of this Agreement. Each Party shall have the right to use
proprietary tangible research materials provided


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


33

















 


to it by the other Party
during the Term and in furtherance of the purposes set forth in this Agreement,
solely for the purposes hereunder. Such proprietary materials received from the
other Party which are directly related to Collaboration Products may be
transferred to Third Parties only with consent of the JDC and JPC, subject to the
form of material transfer agreements or collaboration agreements, as
applicable, covering such materials, such form agreements to be drafted and
agreed upon by the JPC.


 


ARTICLE 4



OPT OUT RIGHTS; ROYALTY  PRODUCTS


 


4.1                               Opt
Out Rights for Collaboration Products or Indications


 


(a)                                  Opt
Out Right. Each Party will have the option to terminate its participation
in the Development and Commercialization of one or more Collaboration Products
as set forth in this Section 4.1 (the Party exercising such right referred
to as the “Non-Developing Party”). A
Non-Developing Party may terminate its participation with respect to: (i) [****];
(ii) [****]; (iii) [****]; or (iv) [****], everywhere in the
world; provided, however, that (A) [****] and (B) [****].


 


(b)                                  Limitations.
The rights of each party to terminate its participation pursuant to this Section 4.1
shall be subject to the following limitations:


 


(i)                                    [****]
may not exercise its opt out rights described in this Section 4.1 with
respect to [****].


 


(ii)                                [****]
can opt out of Development or Commercialization except at one of the points
shown at Exhibit 4.1(b)(ii) with respect to the Existing Products and
at such other points as determined by the Parties with respect to other
Collaboration Products or as provided in Section 4.1(b)(iv). The Parties
agree that they will include such opt out points in the Development Plans for
other Collaboration Products at the time of preparation thereof.


 


(iii)                            If
a Party elects to opt out of an Indication for a Collaboration Product, it
shall automatically be deemed to have opted out of all other Indications for
which that Collaboration Product would be marketed to the same Physician Group
(collectively the “Opt Out Indications”)
and if a Party opts out of an oncology Indication it shall be deemed to have
opted out of all oncology Indications.


 


(iv)                               If
a Party elects to opt out of Commercialization, the election shall not be
effective until [****] after written notice of such election (or such earlier
date


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


34

















 


as specified in writing
by the Independent Development Party (as defined in Section 4.1(d) below))
and may not be made until [****] following the [****]. A party may not opt out
of Commercialization of a Collaboration Product if the opt out would result in
a higher profit to the Party electing to opt-out, based on a comparison of the
royalty payments and Collaboration Product Profit payments that such Party
would have received in the four full calendar quarters prior to the election.


 


(v)                                   Neither
Party can elect to opt out of Development or Commercialization with respect to
a Product if such Party has received notice pursuant to Section 16.2 that
it is in material breach of this Agreement with respect to such Product and it
has not cured such breach or resolved in its favor any dispute regarding
whether there was a breach or whether such breach was cured.


 


(c)                                  Timing.
Subject to the limitations in Section 4.1(b) a Party may exercise its
opt out right with respect to Development of a particular Collaboration Product
or an Opt Out Indication(s) of a particular Collaboration Product at the
decision points described in Section 4.1(b). The Non-Developing Party
shall provide written notice to the other Party of its decision to exercise
such right (the “Opt Out Notice”) during the time
period described in each opt out point.


 


(d)                                  Effects
of Exercise. Effective upon timely delivery of an Opt Out Notice, (i) the
Party that is not the Non-Developing Party will be deemed the “Independent Development Party” with respect to the
applicable Independent Product or Independent Indication, (ii) the
Non-Developing Party will be deemed the “Non-Developing Party”
with respect to the applicable Independent Product or Independent Indication
and responsibility shall be as set forth in Section 4.3, (iii) if
such exercise was made with respect to [****], such Collaboration Product will
become an Independent Product in [****], and (iv) if such exercise was
made with respect to [****]. In any event, the further Development of such [****]
by the Independent Development Party will be subject to the terms set forth in
Sections 4.2 and 4.3. For purposes of the following Section 4.2, [****] is
not [****] with respect to the [****].


 


4.2                               Development
of Independent Products and Independent Indications.


 


(a)                                  Generally.
For each Independent Product and Independent Indication, the Independent
Development Party will have the right, at its own option and expense, to plan
and conduct the Development of and to Commercialize such Independent Product or
Independent Indication, as the case may be, in accordance with the terms of
Sections 4.2, 4.3 and 4.5.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


35

















 


(b)                                  Transition
of Development Activities. Upon a Party giving the Opt Out Notice with
respect to a Collaboration Product or one or more Indications of a
Collaboration Product, the applicable Development Plan or Commercialization
Plan, as the case may be, for such Collaboration Product or Indication, as the
case may be, shall automatically be amended to provide that the Parties shall
carry out and share the costs with respect to only those particular Development
or Commercialization activities under the applicable Development Plan or
Commercialization Plan, respectively, that have commenced on or before the date
of such Opt Out Notice. By way of example, an activity for purposes of this Section would
include a clinical trial that has commenced. Notwithstanding the foregoing, the
Non-Developing Party shall transfer responsibility for such ongoing activities
to the Independent Development Party as of the date of such Opt Out Notice or
as soon as reasonably practicable after such date.


 


4.3                               Rights
and Obligations Upon Opt-Out.


 


(a)                                  Prior
to the Opt-In Trigger. Prior to the date of the Opt-In Trigger,  the Independent Development Party shall be obligated to
Develop the Independent Indication, at its sole cost (subject to Section 4.2(b)),
and shall use Diligent Efforts in such development. The Independent Development
Party shall keep the JSC reasonably informed regarding matters that would
adversely affect Development or Commercialization of the Collaboration Product
in other Indications then being Developed or Commercialized by the Parties
jointly.


 


(b)                                  Following
the  Opt-In Trigger and As to Independent Products.
The Independent Development Party will assume unilateral control over the
Development and Commercialization of (i) an Independent Product after opt
out has occurred as to such Product, and (ii) as to an Independent
Indication from and after the date of the Opt-in Trigger if such option is not
exercised by the other Party, except that:


 


(1)                                 The
Independent Development Party shall give the JSC annual updates regarding the
status and results of any development and commercialization activities
conducted regarding an Independent Indication.


 


(2)                                 If
PDL is the Independent Development Party, then PDL shall use Diligent Efforts
to Develop and Commercialize  such
Independent Product or Independent Indication.


 


(3)                                 If
Biogen Idec is the Independent Development Party, then Biogen Idec shall use
Diligent Efforts to Develop and Commercialize such Independent Product or
Independent Indication.


 


(4)                                 If
[****] is the Independent Development Party and [****] PDL, at its option, may [****].


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


36

















 


(c)                                  Manufacturing.
If the Non-Developing Party as to a Product is responsible for Manufacturing
the applicable Collaboration Product pursuant to Article 8, then such
Non-Developing Party will continue to supply the Independent Development Party
with clinical and/or commercial supply of the applicable Collaboration Product
until such time as the Parties have effected a technology transfer of the
applicable Manufacturing process, at the Independent Development Party’s
request, and the Independent Development Party has validated such process in
its or its CMO’s designated facility and has all necessary regulatory approvals
to Manufacture and such Manufacture has commenced. The Non-Developing Party
shall use commercially reasonable efforts to effect a technology transfer of
the applicable Manufacturing process to the Independent Development Party or
its designated CMO as soon as practicable, but in no event more than [****]
after the Opt Out Notice is delivered The Non-Developing Party shall supply
such Product to the Independent Development Party during the [****] at a cost
of [****]  Between [****] and [****], the
Non-Developing Party shall supply such Product to the Independent Development
Party at a cost of [****]. Between [****] and [****], the Non-Developing Party
shall supply such Product to the Independent Development Party at a cost of [****].


 


(d)                                  Remaining
Program Obligations. The portion of the applicable Development Program with
respect to which the Non-Developing Party has not exercised its option to opt
out will continue unaffected by such opt out.


 


(e)                                  Data
Transfer. Commencing at the time of delivery of the Opt Out Notice, the
Non-Developing Party promptly shall provide, at the sole cost of the Non-Developing
Party, the Independent Development Party with copies of all data and
information, and samples of all tangible items, comprising Know-how and other
Technology of the Non-Developing Party relating to such Independent Product or
Independent Indication, as the case may be.


 


(f)                                    Assignment
of Regulatory Filings. The Non-Developing Party promptly shall, as
applicable, assign or make available by cross-reference to the Independent
Development Party, at the Non-Developing Party’s sole cost, all registrations
for such Independent Product (at the time of exercising its opt out rights) or
Independent Indication (an assignment shall only occur after the expiration of
the Non-Developing Party’s  right to opt
in; a cross reference right shall be available from the time of exercise of the
Non-Developing Party’s opt out rights until the expiration of such party’s opt
in rights or longer, as appropriate), as the case may be, and shall notify the
appropriate Regulatory Authorities and take any other action reasonably
necessary to effect such transfer of ownership or access to regulatory filings;
provided, however, that a Non-Developing Party shall not have any obligation to
assign to the Independent


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


37

















 


Development Party the
Drug Master File for any Independent Product if and for so long as the Non-Developing
Party is engaged in the Manufacture of such Independent Product on behalf of
the Independent Development Party or with respect to Indications or territories
for which such Non-Developing Party has retained rights.


 


(g)                                 Obligations
with Respect to Third Party Contracts. Each Party shall include provisions
in its contracts with Third Parties entered into after [****] and specifically
related to Development or Commercialization of a Collaboration Product or an
Indication of a Collaboration Product that would permit (i) [****] or (ii) [****].
Except as otherwise set forth in this Article 4, the Non-Developing Party
shall use Diligent Efforts to effect assignment (and full release of the
Non-Developing Party) or the granting of a sublicense or equivalent right of
access (and partial release of the Non-Developing Party) to the Independent
Development Party, whether through novation or sublicensing of such contracts
or otherwise, of any and all rights under any contract between the
Non-Developing Party and any Third Party that are necessary for Independent
Development Party to continue with Development or Commercialization of such
Collaboration Product or Indication, as the case may be, and the Independent
Development Party shall reasonably cooperate in connection therewith. If such
assignment, novation or sublicense is not permissible, the Parties shall
discuss in good faith potential alternatives that would enable the Independent
Development Party to exercise the rights and obligations of the Non-Developing
Party under such contracts with respect to such Independent Product while
minimizing the continuing obligations of the Non-Developing Party.


 


(h)                                 Technical
Assistance. During the period commencing with delivery of an Opt Out Notice
and ending [****] following the effective date of such Opt Out Notice, the
Non-Developing Party shall provide reasonable technical assistance as requested
by the Independent Development Party to effectuate an orderly transition of the
Development and Commercialization of such Independent Product or Independent
Indication, as the case may be, to the Independent Development Party. Such
assistance shall be at the expense of the Non-Developing Party until the
effective date of the Opt Out Notice and thereafter shall be at the expense of
the Independent Development Party.


 


(i)                                    Termination
of License Rights. Unless and until the Non-Developing Party decides to
Opt-in pursuant to the Opt In Trigger described herein, it shall have no
further rights under the licenses provided to it under Article 11 with
respect to such Independent Product or Independent Indication.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


38

















 


(j)                                    Transfer of Trademarks. If the
Non-Developing Party owns the Product Trademarks (as defined in Section 12.13(a))
relating to the Independent Product (or Independent Indication, if there are
Product Trademarks that relate specifically to such Indication), ownership of
such Product Trademarks shall be transferred to the Independent Development
Party in the Territories as to which the opt out occurs.


 


4.4                               Rights
to Opt In to Independent Indication During Development.


 


(a)                                  General.
Subject to the terms of this Section 4.4, a Non-Developing Party will have
the option to opt-in to the independent development of an Independent
Indication on a one-time basis, exercisable by providing a notice in writing to
the Independent Development Party within (i) the [****] (the “Opt In Trigger”)  [****]
or (ii) the [****]. Within [****] of receipt of such written notice, the
Independent Development Party shall provide to the Non-Developing Party a
package of data and other information concerning the Independent Indication
reasonably necessary to permit the Non-Developing Party to make an informed
decision on its desire to opt in to Development and Commercialization in the
manner set forth in this Agreement (the “Data Package”).
Following receipt of the Data Package, the Non-Developing Party shall have [****]
within which to elect to opt-in. Any such election shall become effective upon
receipt by the Independent Development Party of a final written determination
by the Non-Developing Party stating its decision to opt-in. Failure to deliver
timely notice of an intent to opt-in shall be conclusively deemed to be a
waiver of such rights.


 


(b)                                  Limitations.
A Non-Developing Party shall not have the right to opt in to the Commercialization
of a Collaboration Product in the event that it delivers an Opt Out Notice for
such Product at any time following final regulatory approval for the marketing
of such Collaboration Product anywhere in the Territory.


 


(c)                                  Expense
Reimbursement. Upon exercise of an opt in right as described in this Section 4.4,
the Non-Developing Party shall reimburse the Independent Development Party for [****]
of that portion of the Development Expenses that would have been incurred by
the Non-Developing Party, had such Party not opted out, during the period in
which such Party had opted out.


 


(d)                                  Effects
of Opt In. Upon exercise of an opt in right and payment of all amounts due
under subsection (c) above, the Independent Indication shall cease
being an Independent Indication and will automatically return to the scope of
the Collaboration. Thereafter, the Parties shall continue Development and
Commercialization of such Indication jointly as described in this Agreement;
provided, that for the [****] following the exercise of an opt in right, the
Party that had been the


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


39

















 


Independent Development
Party shall be the Responsible Development Party, notwithstanding the
provisions of Section 3.2 and the Parties shall agree on the allocation of
responsibilities thereafter.


 


4.5                               Royalty
Products.


 


(a)                                  Effective
upon the exercise of a Party’s opt-out right with respect to a Collaboration
Product, either on a Product or Indication basis, the applicable Product will
be a Royalty Product. The Independent Development Party will pay the Opt-Out
Party the royalty payments described in Section 9.5 for such Royalty
Product.


 


(b)                                  With
respect to Collaboration Products developed by [****], [****] is the
Independent Development Party and [****] is the Non-Developing Party, such
Products are Royalty Products with respect to the [****] and the [****] is
within the Royalty Territory for such Products. [****] will pay to [****] the
royalty payments described in Section 9.5 for all such Royalty Products
Commercialized in the [****].


 


ARTICLE 5



REGULATORY


 


5.1                               Responsible
Regulatory Party. Subject to the roles of the various Committees described
in Article 2, the allocation of Responsible Regulatory Party for
Collaboration Products under this Agreement is as follows:


 


(a)                                  [****]
will be the Responsible Regulatory Party in the [****] and the [****] for all
Collaboration Products; and


 


(b)                                  [****]
will be the Responsible Regulatory Party in the [****] for all Collaboration
Products during the Development of such Collaboration Product. At the time of
receipt of first Regulatory Approval for the [****].


 


5.2                               Regulatory
Filings for Collaboration Products.


 


(a)                                  The
Responsible Regulatory Party identified in Section 5.1 above shall
primarily be responsible for preparing and filing all Regulatory Filings and
seeking all Regulatory Approvals in the relevant territory, including preparing
all reports necessary as part of a Drug Approval Application. All Regulatory
Filings for all Collaboration Products shall be filed in the name of the
Responsible Regulatory Party for a particular Territory. The Parties anticipate
that Regulatory Filings for the EU and North America Territories will be based
on a common set of technical documents. Such


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


40

















 


common set of technical
documents shall be prepared by the Responsible Development Party (or
collectively by both of the Responsible Development Parties where there are two
for a Collaboration Product). The Responsible Regulatory Party and the
Responsible Commercialization Party (to the extent they are different Parties)
shall jointly prepare all Regulatory Filings. All reasonable comments of the
Responsible Commercialization Party for an applicable Collaboration Product
shall be incorporated into such Regulatory Filing for any Collaboration Product.
The Responsible Regulatory Party shall, at all times, consult with the
Responsible Commercialization Party on all communications and other dealings
with the regulatory agencies relating to such Collaboration Product in the
applicable territory. However, the Manufacturing Party shall be solely
responsible for all communications and other dealings with the regulatory
agencies throughout the world pertaining to the Manufacture of such
Collaboration Products. The Responsible Regulatory Party and the Responsible
Commercialization Party shall jointly develop and implement procedures for
drafting and review of Regulatory Filings for the relevant Collaboration
Products in the applicable territory, which procedures shall provide for
sufficient time for the Responsible Commercialization Party to provide comments
to such Regulatory Filings. If the Parties are unable to resolve any disputes
related to such Regulatory Filings content or strategy, such disputes shall be
resolved as set forth in Article 2 hereof. In addition to the right to
cross-reference set forth in Section 3.9(c), the other Party shall have
the right of cross-reference to all such Regulatory Filings or Regulatory
Approvals obtained hereunder for purposes of Collaboration Products.


 


(b)                                  The
Responsible Regulatory Party shall promptly provide the other Party with a copy
(which may be wholly or partly in electronic form) of all Regulatory Filings
with respect to such Collaboration Products that it makes hereunder. The
Responsible Regulatory Party will provide the other Party with reasonable
advance notice of any meeting with any regulatory agency relating to
Development, Commercialization and/or any Drug Approval Application in the
relevant territory, and the other Party shall have the right to observe and, if
the Parties mutually agree in advance or if such Party is the Responsible
Commercialization Party, participate in any such meeting. The Responsible
Regulatory Party also shall promptly furnish the other Party with copies of all
material correspondence or minutes of material meetings with any regulatory
agency relating to Development, Regulatory Filings and/or a Drug Approval
Application in the relevant territory. As between the Parties, the Responsible
Regulatory Party shall be the initial legal and beneficial owner of all
Regulatory Filings and related approvals in the relevant territory for such
Collaboration Product. The Responsible Regulatory Party shall assign all
Regulatory Filings in the North American Territory to the Responsible
Commercialization Party promptly following filing of the NDA (or its foreign
equivalent). No such assignment shall take place in the ROW Territory.


 


(c)                                  The
Manufacturing Party shall provide the Responsible Commercialization Party (if a
different Party) with reasonable advance notice of any scheduled regulatory
inspection of the Manufacturing Party’s Manufacturing facilities for a Product.
The Manufacturing Party shall control all interactions with regulatory


 


41

















 


authorities with respect
to such inspection. The  other Party if
applicable, shall have the right to be present, but not participate, during
such inspection.


 


5.3                               Safety
Data. [****] will ensure that [****] has complete access to any and all
safety data regarding the [****] or any [****] thereof. [****] will ensure that
[****] have complete access to any and all safety data regarding the [****] or
any [****]. If and to the extent that a single global safety database is
required for the [****],  [****] will be
the recognized holder of the global safety database for such Product, which
will be searched to provide answers to safety queries, for signal evaluation,
for the preparation of analyses of similar events and for the preparation of
periodic safety update reports.


 


5.4                               Adverse
Event Reporting. Each Party shall notify the other of all information
coming into its possession concerning any and all side effects, injury,
toxicity, pregnancy or sensitivity event associated with commercial or clinical
uses, studies, investigations or tests with any of the Collaboration Products
or Royalty Products, throughout the world, whether or not determined to be
attributable to such Products (“Adverse Event Reports”). 
The Parties shall each identify a person to coordinate the exchange of Adverse
Event Reports (“Report Coordinators”) so as to
enable timely reporting of such Adverse Event Reports to appropriate
governmental and regulatory authorities consistent with all laws, rules and
regulations. Within a reasonable time after  the Effective
Date, the Parties shall agree in writing on formal procedures for such exchange
in a separate pharmacovigilance agreement. Provided that [****] is under a
similar obligation under the [****] Agreements, the Parties agree to engage in
good faith negotiations regarding a three-party pharmacovigilance agreement. The
Parties acknowledge and agree that such procedures, as well as the Parties’
exchange of Adverse Event Reports in general, must not be in contravention with
the [****] Agreements relating to safety issues involving the [****] that is a
Collaboration Product, or a Royalty Product.


 


5.5                               Copies
of Responses. Within a reasonable time frame prior to submission of
responses to any regulatory authority on product safety issues regarding a
Collaboration Product, a copy of a near final draft response will be provided
to the other Party for review.  Final copies of responses submitted to any
regulatory authority will be provided to the other Party within [****] of
document finalization. [****] acknowledges that such responses may need to be
coordinated under the [****] Agreements with respect to the [****] and agrees
to use commercially reasonable efforts to facilitate such coordination.


 


5.6                               Regulatory
Actions. The Party responsible for interacting with regulators on a
specific safety issue regarding a Collaboration Product or Royalty Product shall
communicate material action requested by regulators to the other Party without
delay.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


42

















 


Such actions may include,
for example, change in label, Dear Doctor letter, trial on hold for clinical
safety reasons and the like.


 


5.7                               Other
Safety Issues. Either Party may request that specific safety issues be
discussed, and the parties will establish a Safety Committee (the “SC”) consisting of an equal number of representatives from
each Party, for such purpose. The role of the SC shall be to advise each Party
concerning the collection and evaluation of safety data, and to respond to any
significant safety issues raised, or requests made, by regulatory authorities.


 


ARTICLE 6



COMMERCIALIZATION


 


6.1                               Overview.
Subject to the roles of the various Committees described in Article 2,
the allocation of primary responsibility for the creation of Commercialization
Plans and the implementation of Commercialization activities of Collaboration
Products described in such Commercialization Plans shall be given to the
Responsible Commercialization Party. The allocation of such responsibilities
with respect to the Existing Products shall be as follows: 


 


	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  North
  American Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  EU
  Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  ROW
  Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 


(a)                                  Commercialization
Plans. All Commercialization of Collaboration Products shall be conducted
pursuant to a Collaboration Product specific, multi-year, global
commercialization plan and budget (in each case, a “Commercialization
Plan”), which shall set forth the anticipated activities (including
market studies, launch plans, Detailing and Promotion) and timelines, and shall
allocate responsibility for carrying out such activities between PDL and Biogen
Idec. Each Commercialization Plan shall include the plan for: (i) Detailing
and Promotion activities for the applicable Collaboration Product in the
applicable Indication for the next [****] (as to the initial Commercialization
Plan, the [****] following launch) and timelines for performing such activities,
(ii) target audience, (iii) anticipated expenses other than
personnel,


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


43

















 


(iv) assumptions
regarding product profile, (v) sales force size, and (vi) Promotional
efforts. Any Commercialization Plan, together with any updates thereto, shall
be prepared and approved as follows:


 


(i)                                    The
Responsible Commercialization Party with strategic guidance from the JSC shall
prepare the initial Commercialization Plan for a Collaboration Product and
submit such plan to the JCC for recommendation for approval and, following such
recommendation, to the JSC for its review and approval; provided that the JCC
must recommend and the JSC must approve the Commercialization Plan if it is
consistent with the then-current Strategic Plan and Approved Budget for that
year. The Parties agree and acknowledge that any such Commercialization Plan
will reasonably allocate between the Parties the performance of any
Post-Approval Clinical Trials for Collaboration Products in the North American
Territory, giving equal consideration to each Party’s abilities when making such
allocation.


 


(ii)                                The
Responsible Commercialization Party will, from time to time, prepare and submit
an update to each Commercialization Plan for its territory for a Collaboration
Product as necessary to reflect changes in the progress, strategy, or costs of
Commercialization of such Collaboration Product, but in no event more
frequently than quarterly.


 


(iii)                            the
Responsible Commercialization Party for a Collaboration Product will prepare
and submit an update to the applicable Commercialization Plan for its territory
on an annual basis thereafter until the Parties cease Commercializing the
applicable Collaboration Product.


 


(iv)                               the
Responsible Commercialization Party will lead the implementation of the
Commercialization Plan in accordance with the allocation of responsibilities
set forth therein.


 


Once approved by the JSC,
a Commercialization Plan shall become effective and supersede any previous
Commercialization Plan, if any, as of the date of such approval. Unless the
Parties otherwise agree, in the event that a Commercialization Plan is
inconsistent with or contradicts the terms of this Agreement, the terms of this
Agreement shall prevail.


 


(b)                                  Commercialization
Plans for Additional Collaboration Products. Promptly following the JSC’s
request for a Commercialization Plan for a particular Collaboration Product,
the Responsible Commercialization Party shall create an initial
Commercialization Plan for such Collaboration Product. Such Commercialization
Plan shall be approved as described in this Section 6.1.


 


6.2                               Commercialization
Reports. The Responsible Commercialization Party will keep the JCC fully
informed regarding the progress and results of its Commercialization activities
under this Agreement.


 


44

















 


6.3                               Standards
of Conduct.


 


(a)                                  Each
Party shall perform, or shall ensure that its Affiliates and permitted
sublicensees and Third Party contractors perform, all Commercialization
activities assigned to it in a good scientific and ethical business manner and
in compliance with applicable laws, rules and regulations.


 


(b)                                  The
Parties shall use Diligent Efforts in Commercializing Collaboration Products.


 


(c)                                  Each
Party shall use Diligent Efforts to execute and carry out the activities
assigned to it in the Commercialization Plan within the associated annual
budget; provided that if a Party exceeds the associated annual budget by
greater than [****] without the prior approval of the JSC, any amount in excess
of such number shall not be considered expenses reimbursable hereunder and such
Party shall be solely responsible for payment of such excess.


 


6.4                               Sales
Force Training. The Responsible Commercialization Party shall develop and
conduct training programs for its sales representatives and for the other Party’s
sales representatives in the event such Party has exercised its Co-Promotion
Option hereunder, specifically relating to the Collaboration Products to be
Commercialized by such Party. Each Party agrees to utilize such training
programs on an ongoing basis to assure a consistent, focused promotional
strategy.


 


6.5                               Branding.
Each Product Commercialized under this Agreement shall be Commercialized
under and in connection with the trademarks and trade dress selected in
accordance with Section 12.13. To the extent that a Party is granted
rights under this Agreement to Commercialize a Product, it shall Commercialize
such Product solely under and in connection with the trademarks and trade dress
selected and approved pursuant to the terms of Section 12.13 (except for a
Party’s use of its house marks, which do not require such approval).


 


6.6                               Pricing.
[****].


 


6.7                               Booking
of Sales.


 


(a)                                  [****]
will be solely responsible for the invoicing and booking of sales of [****]
that are Collaboration Products in the [****] and the supply and distribution
of product in respect to such sales. [****] shall also be responsible for
handling inventory, receivables, managing relationships with the trade,
returns, reimbursements, and charge-backs, trade-customer complaints and
inquiries regarding [****] that are Collaboration Products in the [****].


 


(b)                                  The
JSC will jointly determine which Party will book sales in


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


45

















 


accordance with U.S.
GAAP, including handling inventory, receivables, managing relationships with
the trade, returns, reimbursements, and charge-backs, trade-customer complaints
and inquiries with respect to all other Collaboration Products.


 


(c)                                  For
clarity, each Party’s expenses in connection with the activities described in
this Section 6.7 will be included as Marketing Costs or Distribution
Costs, as appropriate.


 


6.8                               Special
Provisions Relating to Sales Tracking for [****].


 


(a)                                  The
Parties recognize that [****] marketed by [****] or its licensees for
indications in the [****] may nonetheless be sold in the [****], and [****]
marketed by [****] and [****] for indications in the [****] may nonetheless be
sold in the [****]  (collectively, “Cross-Field Sales”). In order to detect and limit these
Cross-Field Sales of such Collaboration Products, the Parties agree as follows:


 


(i)                                    If,
at any time following the receipt of Regulatory Approval in the [****] for an [****]
that is a Collaboration Product or Royalty Product (Collectively, “Collaborative Field Products”), a Party believes that either
(i) sales of such Collaborative Field Products are occurring or will occur
for uses both inside and outside the [****], or (ii) that sales by [****]
of a [****] licensed to it in the [****] by [****] (a “Non-Collaborative
Field Product”) are occurring in any Indication in which a
Collaboration Product or Royalty Product is marketed, then such Party may
provide notice to the other Party of its desire to track sales of the
Collaborative Field Products and the Non-Collaborative Field Products for the
relevant Indications in the relevant territory.


 


(ii)                                Upon
receipt of notice under Section 6.8(a)(i) [****] and [****] shall
meet and agree upon a method of tracking sales of each such product (“Sales Tracking Methodology”) for use in the relevant
Indications including (A) the acquisition of one or more prescription data
products or services (including, by way of example, IMS Xponent or DDD data) or
other relevant pharmaceutical sales tracking research services (including, for
example, use of random sampling, use of data regarding distribution channels as
a proxy for indication-specific sales and development of mathematical models
for approximating indication-specific sales) generally recognized in the
pharmaceutical industry as having a high degree of accuracy and reliability in
the tracking of sales of pharmaceutical products that have a similar nature as
and are prescribed by similar physicians as the relevant [****] in the [****]
and, if applicable, outside the [****] (the “Data Services”),
and (B) the methodology for applying any such resulting data and
information provided by such Data Services to determine the extent to which
sales of the relevant [****] are Cross-Field Sales in the relevant territory. At
the request of either Party, any meeting held under this Section 6.8(a) shall
include licensees of [****] to whom [****] has granted rights in the [****],
provided such licensee


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


46

















 


agrees to be bound to
confidentiality provisions similar to those contained in this Agreement.


 


(b)                                  If
[****] (as applicable) are unable to agree on a Sales Tracking Methodology
pursuant to Section 6.8(a), then the following default methodologies shall
apply:


 


(i)                                    With
respect to each of the U.S., United Kingdom, France, Germany, Italy, or Spain
(each a “Major Regulatory Jurisdiction”) in
which a Collaborative Field Product and a Non-Collaborative Field Product have
received Regulatory Approval and in which Data Services are available at a
reasonable cost (evaluated in light of the anticipated accuracy of such data
and anticipated magnitude of Cross-Field Sales in such country), sales in the
Field in such country and sales outside the Field in such country shall be
calculated for each Collaborative Field Product and each Non-Collaborative
Field Product based on the sales levels reported by the Data Services for such
country. For clarity, the sum of sales of a product in the Field and sales of
such product outside the Field (both as calculated for such country in
accordance with the preceding sentence) shall always be equal to the total
sales for such product in the relevant country.


 


(ii)                                With
respect to each country in which a Collaborative Field Product and a
Non-Collaborative Field Product have received Regulatory Approval and to which Section 6.8(b)(i) is
inapplicable, the percentage of sales of each Collaborative Field Product
attributable to use outside the Field and the percentage of sales of each
Non-Collaborative Field Product attributable to use in the Field shall be
calculated from total sales of such products based on the assumption that the
ratio of Cross-Field Sales to total sales in such country is equal to the ratio
of Cross-Field Sales to total sales calculated across all Major Regulatory
Jurisdictions in which Cross-Field Sales are evaluated pursuant to Section 6.8(b)(i).
If there are no Major Regulatory Jurisdictions in which Cross-Field Sales are
evaluated pursuant to Section 6.8(b)(i), then no Sales Tracking
Methodology shall apply unless and until the Parties agree on a Sales Tracking
Methodology pursuant to Section 6.8(a).


 


(c)                                  All
costs associated with the acquisition and application of such Data Services and
Sales Tracking Methodology shall be shared equally by the Parties and any
licensee of PDL participating in the negotiations contemplated by Section 6.8(a).
All such costs that are attributable to PDL and Biogen Idec shall be included
in the Operating Expenses for the applicable [****]. In addition, the Parties
shall also meet and confer with respect to: (A) how to account for
prescriptions to patients with multiple afflictions, both within and outside
the [****]; (B) the right for each Party to audit, on a periodic basis,
the application of the Data Services and Sales Tracking


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


47

















 


Methodology; and (C) a
mechanism for addressing prescriptions that are tracked back to sole source
purchasing agreements.


 


(d)                                  If
in the course of applying the foregoing Sales Tracking Methodology of the
Collaborative Field Product and Non-Collaborative Field Product pursuant to
this Section 6.8, or in the course of performing an audit of such
application by the other Party, a Party determines that Cross-Field Sales are
occurring at more than [****] or such [****] as may be agreed under the [****]
Agreements [****] (with written notice of such amount to be provided to [****]),
the Parties shall confer, together with the [****], regarding an appropriate
method either to curtail such Cross-Field Sales and to compensate any affected
Party (or affected [****]) for the economic effects thereof. [****] will ensure
that [****] is reimbursed for any such Cross-Field Sales as if such Cross-Field
Sales were included in Collaboration Product Profit. The Parties shall also negotiate
with each other and with such licensee in good faith (provided that such
licensee is bound by a substantially similar obligation) to reach an agreement
implementing a Sales Tracking Methodology that is as accurate as reasonably
possible given the then-available information and the costs associated
therewith.


 


(e)                                  In
the event of any unresolved issues, dispute or disagreement under this Section 6.8
the Parties will submit such dispute, issue or disagreement for resolution
pursuant to Article 17.


 


6.9                               Other
Cross Field Sales. If either Party is marketing a Product for an
Independent Indication and cross field sales may be occurring with the same
Product that is a Collaboration Product, the Parties shall meet and negotiate
in good faith provisions similar to or designed to have the same economic
effect as Section 6.8.


 


6.10                        Product
Recalls. Decisions with respect to recalls, withdrawals or other corrective
actions (“Recall”) with respect to any
Collaboration Product related to manufacturing or product quality issues shall
be handled in accordance with the Commercial Supply Agreement. Decisions with
respect to any other Recall  related to
any Collaboration Product in the Profit Sharing Territory or Royalty Product in
its applicable territory shall be made only upon mutual agreement of the
Parties; provided, however, that nothing herein shall prohibit either Party
from initiating or conducting any Recall (i) mandated by a regulatory
authority or applicable law, (ii) which in its reasonable judgment is, or
such Party reasonably believes will result in, a Class I or Class II
recall (under U.S. Food and Drug Administration regulations or its equivalent
outside of the U.S.) or (iii) if a Party is the Independent Development
Party in its sole discretion. The Parties shall cooperate with respect to any
actions taken or public statements made in connection with any such Recall.
Except as otherwise provided in this Section 6.10, the Parties will share
all costs of a Recall with respect to any Collaboration Product in the Profit
Sharing Territory as a Shared Promotion Expense.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


48

















 


An Independent
Development Party shall bear all costs of a Recall with respect to any Royalty
Product in the Royalty Territory. Notwithstanding the foregoing, a Party shall
bear any and all costs of a recall, market withdrawal or other corrective
action with respect to a Collaboration Product in the Territory, including the
COGM for the Collaboration Product in question, to the extent the Recall is
attributable to the fault of such Party and results from (a) a grossly
negligent or reckless act or omission or intentional misconduct of such Party
(or its Affiliate, agent or sublicensee), (b) the failure of the
Manufacturing Party to perform its responsibilities and Manufacture the
Collaboration Product in compliance with specifications or with applicable
laws, including applicable Good Manufacturing Practices, or (c) a breach
of any laws or the terms of this Agreement.


 


6.11                        [****]. [****]
hereby covenants that it shall not, nor shall it cause any Affiliate or
sublicensee to, [****] that are Collaboration Products or Independent Products
for any use outside the [****]. Except as permitted pursuant to Section 3.8,
[****] hereby covenants that it shall only [****] in the [****] pursuant to the
[****] Agreements.


 


ARTICLE 7



CO-PROMOTION OF COLLABORATION PRODUCTS


 


7.1                               Option
to Co-Promote.


 


(a)                                  Subject
to this Section 7.1, PDL and Biogen Idec shall each have the right, to the
extent it is not the Responsible Commercialization Party (the “Co-Promotion Option”) to elect at specified times to
Commercialize a particular Indication of a Collaboration Product in either or
both of the North American Territory or the EU Territory jointly with the
Responsible Commercialization Party for such Collaboration Product.


 


(b)                                  [****]
may exercise its Co-Promotion Option in respect of a particular Territory only
if it has and only with respect [****] shall reasonably be expected to be in
place at the time of Co-Promotion. [****] may exercise its Co-Promotion Option
in respect of a particular Territory only with respect [****] which shall
reasonably be expected to be in place at the time of Co-Promotion.


 


(c)                                  A
Party may exercise its Co-Promotion Option with respect to a particular
Indication of a Collaboration Product in a particular territory by providing
written notice of such exercise to the Responsible Commercialization Party and
the JCC. Such exercise must be provided for a particular territory no later
than the date


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


49

















 


[****] prior to the
anticipated filing date for Regulatory Approval in such territory for such
Indication for the Collaboration Product and will be effective [****] following
receipt of such notice by the Responsible Commercialization Party. Thereafter,
the Party exercising the Co-Promotion Option shall be deemed a co-promoting
Party (the “Co-Promoting Party”) of such
Indication for such Collaboration Product in such territory.


 


(d)                                  If
a Co-Promotion Option is exercised, then responsibility for Detailing will be
shared on a basis to be determined by the JCC taking into account the resources
and capabilities of each Party as well as each Party’s prior efforts under
Co-Promotion Options previously exercised and the nature of the market and
Indication for which the Co-Promotion Option has been exercised. The Parties
agree and acknowledge that, in allocating such Detailing activities between the
Parties, the JCC shall apply the following principle in the event that both
Parties have resources and capabilities in respect of a specific sales force
(or neither Party has such resources and capabilities):  the JCC shall give first consideration to
using [****] and first consideration to using [****].


 


7.2                               Co-Promotion
Period. The “Co-Promotion Period” will commence
upon the Co-Promoting Party’s exercise of the Co-Promotion Option and will
expire upon the earlier of: (a) termination of the Parties’
Commercialization of the applicable Collaboration Product for the applicable
Indication in the relevant portion of the Profit Sharing Territory, and (b) [****]  following the date that the Co-Promoting Party provides
written notice to the Responsible Commercialization Party terminating the
Co-Promoting Party’s Co-Promotion activities hereunder (or such lesser period
of time as the Responsible Commercialization Party is able to satisfactorily
fill the sales force commitments previously filled by the Co-Promoting Party) .


 


7.3                               Co-Promotion
in Commercialization Plan. The Parties’ co-promotion activities for any
Collaboration Product in the relevant territory shall be governed by the
Commercialization Plan for such Collaboration Product prepared by the  Responsible Commercialization Party. Each
Commercialization Plan for a Co-Promote Product shall set forth the allocation
between the Parties of the co-promotion activities for the Collaboration
Product in the applicable territory determined pursuant to Section 7.1(d),
the sales and marketing strategy determined by the JSC and the means by which
to maximize the overall gross profit from sales of such Collaboration Product.


 


7.4                               Scope.
The Co-Promotion by the Co-Promoting Party of any Collaboration Products under
this Agreement shall be subject to the terms and conditions set forth in this Article 7.
For purposes of this Article 7, a Collaboration Product subject to
co-promotion under this Agreement shall be referred to as a “Co-Promote Product.”


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


50














 


7.5                               Advertising
and Promotional Materials.


 


(a)                                  The
Responsible Commercialization Party shall be responsible for designing and
supplying all advertising and promotional materials for each Co-Promote Product.
The Responsible Commercialization Party shall provide samples of such
advertising and promotional materials to the JCC for its information.


 


(b)                                  Each
Party agrees that:


 


(i)                                    it
will instruct its sales representatives to use only promotional materials,
Co-Promote Product samples, and literature approved for use under this Section 7.5
for the Promotion of the Co-Promote Product; and


 


(ii)                                all
written, electronic and visual communications provided by a Party to its sales
representatives regarding the positioning, selling messages or product strategy
of the applicable Co-Promote Product will be subject to prior review and
approval by the Responsible Commercialization Party; provided, that a
communication, once approved, need not be re-submitted for approval again prior
to its re-use unless the Co-Promote Product labeling applicable to such
communication has been changed since such prior approval date.


 


7.6                               Training.


 


(a)                                  The
Responsible Commercialization Party will develop and implement training
programs for the Co-Promoting Party’s sales representatives as to matters
relating specifically to the Co-Promote Product in a manner as set forth in the
applicable Commercialization Plan. Training shall be carried out at a time that
is mutually acceptable to the Parties, and that is prior to but reasonably near
the commencement of the co-promoting Party’s co-promotion of the Co-Promote
Product. All costs associated with such product-specific training shall be
shared equally by the Parties, except that the Co-Promoting Party shall pay all
travel costs for its sales representatives to attend such training.


 


(b)                                  The
Responsible Commercialization Party shall provide continuing education
regarding each Co-Promote Product for sales representatives of the Co-Promoting
Party on substantially the same schedule as it provides continuing
education for its own sales representatives for such Co-Promote Product.


 


7.7                               Sales
and Distribution of Co-Promote Product.


 


(a)                                  For
each Co-Promote Product, other than [****], the Responsible Commercialization
Party shall be solely responsible for handling all returns, recalls,


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


51

















 


order processing,
invoicing and collection, distribution, and inventory and receivables. With
respect to [****], [****] shall solely be responsible for such activities.  The Co-Promoting Party may not accept orders for Co-Promote
Product or make sales for its own account or for the Responsible
Commercialization Party’s account. If the Co-Promoting Party receives any order
for a Co-Promote Product, it shall refer such orders to the Responsible
Commercialization Party for acceptance or rejection.


 


(b)                                  The
Responsible Commercialization Party shall have the right and responsibility for
establishing and modifying the terms and conditions with respect to the sale of
the Co-Promote Product, other than [****], including any terms and conditions
relating to or affecting the price at which the Co-Promote Product will be
sold, discounts available to managed care providers, any discount attributable
to payments on receivables, distribution of the Co-Promote Product, and
credits, price adjustments, or other discounts and allowances to be granted or
refused. With respect to [****], [****] shall solely be responsible for such
activities.


 


ARTICLE 8


 


MANUFACTURE AND SUPPLY


 


8.1                               Overview.
The Party primarily responsible for the Manufacturing Clinical Supplies or
Commercial Supplies of Collaboration Products (the “Manufacturing
Party”) will be determined by the JSC (except for the Existing
Products, with respect to which such responsibility is allocated by the table
below) and shall be subject to the terms of this Article 8 and any
Clinical Supply arrangement or Commercial Supply Agreement entered into by the
Parties after the Effective Date. Unless determined otherwise by the JSC, the
Manufacturing Party for the Existing Products will be as follows:


 


	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 


8.2                               Clinical
Manufacturing.


 


(a)                                  Clinical
Supply. Each Manufacturing Party shall Manufacture a clinical supply of
bulk or finished Collaboration Products pursuant to a plan and on terms set by
the Manufacturing Party, as approved by the JSC (a “Supply Plan”).
Notwithstanding the aforementioned, [****] shall ensure a supply of [****]
necessary to complete dosing in the [****] as of the Effective Date, provided
that such supply shall be not less than [****].


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


52

















 


(b)                                  Supply
Plan. The Supply Plan shall be in accordance with the supply schedule dictated
by the applicable Development Plan for each Collaboration Product and shall set
forth, among other things, the quantities of and specifications for such
Collaboration Products to be supplied by the Manufacturing Party for
Development purposes and an approximate delivery schedule therefor.


 


(c)                                  Cost
of Clinical Supply. The Manufacturing Party will notify the JDC of the COGM
for such Collaboration Products under the applicable Development Program for quantities
of Collaboration Products supplied for clinical use.


 


8.3                               Commercial
Manufacturing.


 


(a)                                  Commercial
Supply Agreement. No later than [****] prior to the anticipated First
Commercial Sale of a Collaboration Product as specified in the Commercialization
Plan for such Collaboration Product, PDL and Biogen Idec shall negotiate in
good faith one or more definitive supply agreements (each, a “Commercial Supply Agreement”). Each such agreement will set
forth the specific terms and conditions governing the supply of bulk and/or
finished Collaboration Products by the Parties for commercial use. Any
Commercial Supply Agreement shall include terms substantially similar to those
set forth in Exhibit 8.3 as well as additional reasonable and customary
terms relating to commercial supply.


 


(b)                                  Cost
of Commercial Supply. Each  Commercial
Supply Agreement will provide for a transfer price from the Manufacturing Party
to the Collaboration based on the total quantity of finished Collaboration
Product ordered per calendar year (including material for Collaboration Product
samples) calculated as follows:  Transfer
Price = [****].


 


8.4                               Exclusivity.
Each Responsible Commercialization Party, its Affiliates and sublicensees,
shall purchase all of their respective requirements for the supply of
Collaboration Products from the Manufacturing Party, unless otherwise agreed in
writing by the Parties. The Manufacturing Party may not supply Collaboration
Product for use in any field to any party other than the Responsible
Commercialization Party, its Affiliates and sublicensees, except that [****]
may provide material manufactured by [****] to [****] to support [****].


 


8.5                               Good
Manufacturing Practice. Each Collaboration Product, regardless of the form
or formulation delivered by the Manufacturing Party, shall be Manufactured by
the Manufacturing Party in accordance with GMP and the specifications for such
Collaboration Product.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


53

















 


ARTICLE 9



FINANCIAL TERMS


 


9.1                               Licensing
Fee. As partial payment for the rights and licenses granted by PDL pursuant
to this Agreement, Biogen Idec shall pay to PDL, within five (5) days
following the Effective Date, the following non-refundable and non-creditable
license fees with respect to each Collaboration Product, as follows:


 


(a)                                  With
respect to the [****], total license fees of twenty-five million dollars
($25,000,000); and


 


(b)                                  With
respect to the [****], total license fees of fifteen million dollars
($15,000,000).


 


9.2                               Milestone
Payments. Biogen Idec shall make the following non-creditable and
non-refundable milestone payments to PDL within [****] after the achievement by
Biogen Idec of each of the following milestones (or, in the event that any such
milestone is achieved by PDL, after PDL shall have given Biogen Idec sufficient
written documentation evidencing the achievement of such milestone). For the
avoidance of doubt, the milestone payments to be paid under this Section 9.2
shall be paid even following the delivery of an Opt Out Notice by PDL under Article 4
provided that Biogen Idec continues Development of the product. However, such
milestone payments shall not be paid following the delivery of an Opt Out
Notice by Biogen Idec under Article 4.


 


(a)                                  Milestone
Payments for [****] and [****] that are Collaboration Products or [****]. The
following milestone payments shall be paid by Biogen Idec to PDL upon the [****]
of each of the designated milestone events for any [****] that are
Collaboration Products or [****] for which [****]:


 






*Certain information on
this page has been omitted and filed separately with the commission. Confidential
treatment has been requested with respect to the omitted portions.


 


54

















 


	
  Milestone Event

  	
   

  	
  Milestone Payment

  [****]

  	
   

  	
  Milestone Payment

  [****]

  	
   

  	
  Milestone Payment

  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  n/a

  	
   

  	
  n/a

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






*  [****],
Biogen Idec shall pay an additional [****] to PDL.


 


For the avoidance of doubt, the foregoing milestone
payments will only be made a maximum of [****] per milestone event, regardless
of the number of Collaboration Products, applicable Independent Products or
Indications Developed.


 


(b)                                  Milestone
Payments for [****] that are Collaboration Products or Independent Products. The
following milestone payments shall be paid by Biogen Idec to PDL upon the [****]
occurrence of each of the designated milestone events: (i) for an [****]
that is an Antibody Product and a Collaboration Product or Independent Product,
and (ii) for an [****] that is a Non-Antibody Product and a Collaboration
Product or Independent Product. For clarity, each milestone below will be
payable a maximum of [****], [****] for a Product in category (i) and [****]
for a Product in category (ii), irrespective of the number of such [****] that
may trigger the milestone events.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


55

















 


	
  Milestone Event

  	
   

  	
  Milestone Payment

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  



 


9.3                               R&D
Funding. Biogen Idec shall make a [****] non-creditable, non-refundable
R&D funding payment to PDL within [****] after approval by the JSC of a [****]
to the JSC following the Effective Date.


 


9.4                               Profit
Sharing. PDL and Biogen Idec shall share equally in the Collaboration
Product Profit for each Collaboration Product as set forth Exhibit C. The
Parties shall share Collaboration Product Profit hereunder with respect to each
Collaboration Product in the Profit Sharing Territory until each such
Collaboration Product is permanently withdrawn from and is no longer being sold
anywhere in the Profit Sharing Territory or otherwise ceases to be a
Collaboration Product.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


56

















 


9.5                               Royalties.


 


(a)                                  Royalties.


 


(i)                                    For
the term specified below, the Independent Development Party shall pay to the
Non-Developing Party incremental royalties on Net Sales of the relevant Royalty
Product in the Royalty Territory, at a royalty rate as determined in accordance
with the schedules set forth in Exhibit D, as applicable. The term of the
Independent Development Party’s obligation to pay a royalty under this Section 9.5(a)(i) for
a particular Royalty Product (collectively, the “Royalty Term”)
shall expire on a country-by-country and Royalty Product-by-Royalty Product
basis, upon the later of:


 


(1)                                 In
the event that Biogen Idec is the Independent Development Party for [****] that is an Antibody Product, (i) [****],
and (ii) [****];


 


(2)                                 In
the event that Biogen Idec is the Independent Development Party for any
Products other than an [****] that is
an Antibody Product (i) [****], and (ii) [****]; or


 


(3)                                 In
the event that PDL is the Independent Development Party, (i) [****], and (ii) [****].


 


(ii)                                For
purposes of calculating Net Sales under this Section 9.5, the Independent
Development Party may make the additional deductions described herein.


 


(1)                                 In
the event that pursuant to a Third Party License, the Independent Development
Party must pay such Third Party royalties on sales of the Royalty Product in a
particular country in the Royalty Territory, then the Independent Development
Party may deduct [****] of such royalties paid to such Third Party from Net
Sales of the applicable Royalty Product in such country.


 


(2)                                 Following
the expiration in a particular country in the Royalty Territory of the last to
expire Valid Claim of a relevant Patent Right claiming the Manufacture, use or
sale of a particular Royalty Product, the royalty rates set forth in Exhibit D
with respect to such Royalty Product will be decreased [****] until expiration
of the Royalty Term.


 


(3)                                 If,
during the Royalty Term, a Third Party receives regulatory approval for and
commences commercial sale of a Generic Product in a country of the Royalty
Territory, then the Independent Development Party shall have the right to
reduce any royalties due under Section 9.5(a)(i) on account of the
sale of such


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


57

















 


Royalty Products for such
Indication by [****] during such time as such Third Party continues sales of
such Generic Product in such country. As used in this Section, “Generic Product” means a Third Party product (a) [****];
and (b) [****]. Notwithstanding the foregoing, Generic Products do not
include Royalty Products sold by either Party’s sublicensees or distributors
pursuant to this Agreement. For the avoidance of doubt, the reduction in
royalties pursuant to Section 9.5(a)(ii)(3) for generic competition
or Section 9.5(a)(ii)(2) for patent expiration, shall not, in the
aggregate, [****].


 


(b)                                  Special
Provision Relating to ROW Territory. With respect to any definitive
sublicense agreement under which Biogen Idec grants a Third Party a license to
develop or commercialize one or more Royalty Products in the ROW Territory
which is entered into prior to the [****], Biogen Idec will pay to PDL [****]
of any Sublicensing Revenues received by Biogen Idec in connection with such
sublicense agreement(s). As used in this Section 9.5(b) ONLY, “Sublicensing Revenues” means any [****], but excluding: (1) [****];
and (2) [****].


 


(c)                                  Reporting
and Payment.


 


(i)                                    Until
the expiration of the Independent Development Party’s royalty obligations under
Section 9.5, the Independent Development Party agrees, within [****] after
the end of each Calendar Quarter, to make payments and written reports to the
Non-Developing Party based upon Net Sales of the Royalty Products (substituting
“Royalty Products” for “Collaboration Products” in the Net Sales definition) in
the relevant Field in the Royalty Territory by the Independent Development
Party, its Affiliates or sublicensees during such Calendar Quarter and provide
written reports to the Non-Developing Party detailing for the period in
question Net Sales by Product, royalty rate and royalty due.


 


(ii)                                The
information contained in each report under Section 9.5(c)(i) shall be
considered Confidential Information of the Independent Development Party. Concurrent
with the delivery of each quarterly report, the Independent Development Party
shall make the payment due the Non-Developing Party hereunder for the Calendar
Quarter covered by such report.


 


(iii)                            It
is understood that only one royalty payment under Section 9.5 shall be
payable on a given unit of Royalty Product disposed of under this Agreement. In
the case of transfers or sales of any Royalty Product between the Independent
Development Party and an Affiliate or sublicensee of the Independent
Development Party, such royalty shall be payable with respect to the sale of
such Royalty Product to (i) an independent Third Party not an Affiliate of
the seller or (ii) if the end user is an Affiliate of the seller, then
such end user.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


58

















 


9.6                               Provisions
Regarding [****]. After the Effective Date, PDL will use Diligent Efforts
to renegotiate the terms of that certain License Agreement between [****] to
extend the diligence deadline for [****] (as defined in the [****]) to  [****]. If, as a result of such renegotiations, the royalty rate
payable by PDL on sales of licensed antibody products [****] (and provided the
calculation of such royalty remains subject to the same offset provisions as
included in the form of the [****] as of the Effective Date, then PDL may not
charge as Third Party License Fees hereunder any royalty amount paid under the [****]
in [****].


 


ARTICLE 10



PAYMENT TERMS


 


10.1                        Accounting.


 


(a)                                  Product
Sales Records. Each Party (a “Selling Party”)
agrees to keep complete and accurate records for a period of at least [****]
after the relevant payment is owed pursuant to this Agreement, setting forth
the sales and other disposition of Collaboration Products or Royalty Products
sold or otherwise disposed of pursuant to this Agreement in sufficient detail
to enable compensation payable to either Party hereunder to be determined. The
Selling Party further agrees to permit its books and records to be examined by
an independent accounting firm selected by the other Party to verify reports
provided for in Section 9.5. Unless the other Party obtains the prior
written consent of the Selling Party, such accounting firms must be selected
from among the four largest U.S. accounting firms. Such audit shall not be
performed more frequently that [****] nor more frequently than
once with respect to records covering any specific period of time. Such
examination is to be made at the expense of auditing Party, except in the event
that the results of the audit reveal a discrepancy in favor of the Selling
Party of [****] or more over the period being audited, in which
case reasonable audit fees for such examination shall be paid by the Selling
Party.


 


(b)                                  Expense
Records. Each Party (an “Expense Incurring Party”)
agrees to keep full, clear and accurate records for a period of at least [****]
after the relevant report is made pursuant to Section 9.5(c) setting
forth its incurred Development Expenses, Operating Expenses, Ongoing
Development Expenses, Other Out-of-Pocket Costs in sufficient detail to enable
compensation payable to the other Party (an “Expense
Reimbursing Party”) hereunder to be determined. Each Expense
Incurring Party further agrees to permit its books and records to be examined
by an independent accounting firm selected by the Expense Reimbursing Party to
verify reports made


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


59

















 


pursuant to Section 9.5(c).
Unless the Expense Reimbursing Party obtains the prior written consent of the
Expense Incurring Party, such accounting firms must be selected from among the
four largest U.S. accounting firms. Such audit shall not be performed more
frequently that [****]. Such examination is to be made at the expense of the
Expense Reimbursing Party, except in the event that the results of the audit
reveal a discrepancy in favor of the Expense Incurring Party of [****] or more
over the period being audited, in which case reasonable audit fees for such
examination shall be paid by the Expense Incurring Party.


 


10.2                        Methods of
Payments. All payments due to either PDL or Biogen Idec under this
Agreement shall be paid in Dollars by wire transfer to a bank in the U.S.
designated in writing by the Party to which the payment is due. Payments due on
Collaboration Products or Royalty Products distributed in countries or
jurisdictions outside of the U.S. shall be made in U.S. Dollars after being
converted at the rate of exchange for such country’s or jurisdiction’s currency
in U.S. Dollars as listed in the Wall Street Journal, Eastern Edition on the
last business day of the Calendar Quarter in which such sales were made.


 


10.3                        Taxes. If
provision is made in law or regulation of any country for withholding of taxes
of any type, levies or other charges with respect to the any amounts payable
hereunder to a Party, the other Party (a “Withholding Party”)
shall promptly pay such tax, levy or charge for and on behalf of the Party to
the proper governmental authority, and shall promptly furnish the Party with
receipt of such payment. The Withholding Party shall have the right to deduct
any such tax, levy or charge actually paid from payment due the Party or be
promptly reimbursed by the Party if no further payments are due the Party. Each
Withholding Party agrees to assist the other Party in claiming exemption from
such deductions or withholdings under double taxation or similar agreement or
treaty from time to time in force and in minimizing the amount required to be
so withheld or deducted.


 


ARTICLE 11



LICENSES


 


11.1                        Licenses
to Biogen Idec.


 


(a)                                  Subject
to the terms and conditions of this Agreement, PDL and its Affiliates hereby
grant to Biogen Idec:


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


60

















 


(i)                                    a
worldwide license, under the PDL Technology and Joint Inventions, to conduct
Development of the Collaboration Products in the applicable Field in accordance
with the Development Plans (which shall not include any Independent Indications
for such Products);


 


(ii)                                a
license, under the PDL Technology and Joint Inventions, to use, import, offer
for sale and sell Collaboration Products in the applicable Field and in the
North American Territory and EU Territory (i.e., the Profit Sharing Territory)
in accordance with the Commercialization Plans (which shall not include any
Independent Indications for such Products);


 


(iii)                            a
worldwide license, under the PDL Technology and Joint Inventions, to make and
have made Collaboration Products for which Biogen Idec is the Manufacturing
Party, provided that such manufacture is solely for use in the applicable
Field;


 


(iv)                               a
worldwide license, under the PDL Technology and Joint Inventions, to develop,
make, have made, use, have used, import, offer for sale and sell, in the
applicable Field, Independent Products for which Biogen Idec is the Independent
Development Party;


 


(v)                                   a
worldwide license, under the PDL Technology and Joint Inventions, to develop,
use, have used, import, offer for sale and sell, in the applicable Field and in
the Independent Indications, those Royalty Products for which Biogen Idec is
the Independent Development Party with respect to such Indications; and


 


(vi)                               a
license, under the PDL Technology and Joint Inventions, to use, have used,
import, offer for sale and sell, in the applicable Field and in the ROW
Territory (i.e., the Royalty Territory), Royalty Products.


 


(b)                                  The
licenses set forth in Sections 11.1(a)(i), (ii) and (iii) shall be
exclusive in the Field (except as to PDL) for all PDL Know-How, for all PDL
Patent Rights other than the Queen Patents, and with respect to PDL’s interest
in the Joint Inventions. The licenses set forth in Section 11.1(a)(iv)-(vi) shall
be exclusive (even as to PDL) for all PDL Know-How, for all PDL Patent Rights
other than the Queen Patents, and with respect to PDL’s interest in the Joint
Inventions. Subject to all of the restrictions of Section 11.1(a) and
this Section 11.1(b), all licenses set forth in Section 11.1(a) are
non-exclusive with respect to the Queen Patents.


 


(c)                                  The
licenses set forth in Section 11.1(a) may only be sublicensed to
Biogen Idec Affiliates and permitted Third Parties.


 


11.2                        Licenses
to PDL.


 


(a)                                  Subject
to the terms and conditions of this Agreement, Biogen Idec and its Affiliates
hereby grant to PDL:


 


(i)                                    a
worldwide license, under the Biogen Idec Technology and


 


61

















 


Joint Inventions, to
conduct Development of the Collaboration Products in the applicable Field in
accordance with the Development Plans (which shall not include any Independent
Indications for such Products);


 


(ii)                                a
license, under the Biogen Idec Technology and Joint Inventions, to use, import,
offer for sale and sell Collaboration Products in the applicable Field and in
the North American Territory and EU Territory 
in accordance with the Commercialization Plans (which shall not include
any Independent Indications for such Products);


 


(iii)                            a
worldwide license, under the Biogen Idec Technology and Joint Inventions, to
make and have made Collaboration Products for which PDL is the Manufacturing
Party, provided that such manufacture is solely for use in the applicable
Field;


 


(iv)                               a
worldwide license, under the Biogen Idec Technology and Joint Inventions, to
develop, make, have made, use, have used, import, offer for sale and sell, in
the applicable Field, Independent Products for which PDL is the Independent
Development Party;


 


(v)                                   a
worldwide license, under the Biogen Idec Technology and Joint Inventions, to
develop, use, have used, import, offer for sale and sell, in the applicable
Field and in the Independent Indications, those Collaboration Products for
which PDL is the Independent Development Party with respect to such Indications;
and


 


(vi)                               a
license, under the Biogen Idec Technology and Joint Inventions, to use, have
used, import, offer for sale and sell, in the applicable Field and in the ROW
Territory  Royalty Products, if the right
to Develop and Commercialize any Royalty Product in the ROW Territory revert to
PDL.


 


(b)                                  The
licenses set forth in Sections 11.2(a)(i), (ii) and (iii) shall be
exclusive in the Field (except as to Biogen Idec) for all Biogen Idec
Technology and with respect to Biogen Idec’s interest in the Joint Inventions. The
licenses set forth in Section 11.2(a)(iv)-(vi) shall be exclusive
(even as to Biogen Idec) for all Biogen Idec Technology and with respect to
Biogen Idec’s interest in the Joint Inventions.


 


(c)                                  The
licenses set forth in Section 11.2(b) may only be sublicensed to PDL
Affiliates and permitted Third Parties.


 


11.3                        No Implied
Licenses. Except as expressly provided in this Agreement, neither Party
grants to the other Party any right or license in any intellectual property
right, whether by implication, estoppel or otherwise. No implied licenses are
granted under this Agreement. Each Party hereby covenants and agrees not to use
or


 


62

















 


sublicense any of its
rights under the licenses set forth in this Article 11 except as expressly
permitted in this Agreement. In particular, for the avoidance of doubt, PDL has
no right to, and is not hereby granting any license to, [****].


 


11.4                        Affiliates.
The licenses granted pursuant to this Article 11 include the right of
each licensee to use its Affiliates in exercising such rights and carrying out
its obligations under this Agreement; provided that in the event any such
Affiliate ceases to meet the definition of an Affiliate (whether due to the
transfer or sale of all or substantially all of the assets or stock of such
Affiliate or otherwise) then such right with respect to such Affiliate shall
terminate


 


11.5                        Third
Party Licenses.


 


(a)                                  Certain
license rights granted by one Party to the other Party under this Article 11
may include a sublicense of Patent Rights and/or Know-How of Third Parties
under Third Party Licenses. Notwithstanding anything to the contrary in this
Agreement, the licenses granted under the provisions of this Article 11 (i) are
subject to the applicable terms and conditions of such Third Party Licenses,
and (ii) the Party receiving a sublicense under such Third Party License
shall, in exercising such sublicense rights, comply with the applicable
provisions of such Third Party Licenses. The Parties agree and acknowledge that
the licenses granted to Biogen Idec under this Article 11 shall be subject
to the following Third Party License provisions (as such Third Party Licenses
and specific provisions may be amended from time to time upon notice to and consent
of the JPC) and such provisions shall supersede anything to the contrary
contained in this Agreement:  (i) [****];
(ii) [****]; (iii) [****]; (iv)  [****]; (v) [****];  (vi) [****]; (vii) [****]; (viii) [****];
and (ix) [****]. The Parties agree and acknowledge that the provisions of [****]
are incorporated by reference herein solely for the benefit of [****]. The
Parties agree and acknowledge that a copy of Paragraphs [****] is attached
hereto as Exhibit 11.5 and shall be binding on Biogen Idec as if it were a
party to the [****].


 


(b)                                  PDL
represents and warrants to Biogen Idec that, as of the Effective Date, (i) [****];
(ii) [****]; (iii) [****]. [****].


 


(c)                                  With
respect to each Third Party License to which a Party is a party, such Party (i) shall
use Diligent Efforts to maintain such Third Party License in full force and
effect, including without limitation seeking amendments or modifications of
such agreements if necessary or useful as agreed by the Parties to continue
Development or Commercialization of a Product, (ii) shall not amend,
modify or permit to be amended or modified such Third Party License to reduce
or impair the right sublicensed hereunder or to increase the obligations or
burdens on the other Party hereunder without the other Party’s consent, not to
be unreasonably withheld, except as


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


63

















 


to the [****] as
specifically provided herein, (iii) shall provide the other Party with a
copy of each notice received by such Party under such Third Party License
Agreement material to the rights granted to the other Party under this
Agreement and derivative of rights granted under such Third Party License
Agreement, and (iv) shall use Diligent Efforts to cause such Third Party
License, as to rights licensed hereunder, to convert to a direct license to the
other Party hereunder upon the termination of such Third Party License
(provided that the other Party agrees to be bound by the terms and conditions
of such Third Party License) and subject to the terms of such Third Party
Licenses, including the following provisions (as such Third Party Licenses and
specific provisions may be amended from time to time upon notice to and consent
of the JPC):  (a)  [****]; (b) [****];
(c) [****]; (d) [****]; and (e) [****].


 


ARTICLE 12



INTELLECTUAL PROPERTY OWNERSHIP AND PATENT RIGHTS


 


12.1                        Ownership
of Intellectual Property.


 


(a)                                  Generally.
[****].


 


(b)                                  Joint
Ownership. All Joint Inventions will be owned jointly by PDL and Biogen
Idec.


 


(c)                                  Inventorship
Procedure. The JPC shall, within a reasonable time after the Effective
Date, establish and oversee a mutually agreeable procedure for (i) identifying
Collaboration Inventions, and (ii) determining inventorship of Inventions
made by a Party in connection with the Collaboration, provided that such
determination shall be made in accordance with the applicable patent laws
relating to inventorship in the country where each patent application is to be
filed in instances where U.S. law regarding determinations of inventorship may
be at variance with the laws of the said country. All such determinations shall
be documented to ensure that any divisional or continuation patent application
reflect appropriate inventorship and that inventions and patent rights are
assigned to the appropriate assignee.


 


12.2                        Disclosure
of Patentable Inventions. Each Party shall provide to the other Party any
invention disclosure submitted in the normal course of its business which
discloses a Collaboration Invention within [****] after the Party determines
that an Invention has been made.


 


12.3                        Patent Due
Diligence. Each Party agrees to use good faith efforts to bring to the
attention of the JPC in a timely manner any Third Party Patent Right it


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


64

















 


discovers, or has
discovered, and which the disclosing Party reasonably believes relates to, the
Development or Commercialization of a Collaboration Product.


 


12.4                        Prosecution
of Patents


 


(a)                                  PDL
Patent Rights


 


(i)                                    PDL
Target Patent Rights. Decisions regarding the preparation, filing,
prosecution and maintenance of PDL Target Patent Rights shall be made by the
JPC. PDL shall be responsible, using in-house counsel or outside patent counsel
selected by PDL and reasonably acceptable to Biogen Idec to implement the
decisions of the JPC regarding the preparation, filing, prosecution and
maintenance of such PDL Target Patent Rights. PDL shall provide the JPC with a
copy of each patent application within such PDL Target Patent Rights as filed,
together with its filing date and serial number. PDL shall keep the JPC advised
of the status of all communications, actual and prospective filings or
submissions regarding the PDL Target Patent Rights, and shall give the JPC an
opportunity to review and comment on any such communications, filings and
submissions proposed to be sent to any patent office. PDL shall consult with,
and obtain the approval of, the JPC before deciding that it is no longer
interested in maintaining or prosecuting the PDL Target Patent Rights
contemplated by Section 12.10, provided, however, that if the JPC cannot
reach agreement as to whether or not to maintain or prosecute such PDL Target
Patent Rights, then PDL shall continue to maintain and prosecute such PDL
Target Patent Rights. [****].


 


(ii)                                Queen
Patents.             Decisions regarding the
preparation, filing, prosecution and maintenance of the Queen Patents shall be
made solely by PDL. Notwithstanding the foregoing, [****]. PDL shall
provide the JPC with a copy of each patent application within the Queen Patents
that contains claims
that specifically relate to a Collaboration Target or Collaboration Product,
as filed, together with its filing date and serial number. PDL shall keep the
JPC advised of the status of all communications, actual and prospective filings
or submissions regarding the [****] and shall give the JPC an opportunity to
review and comment on any such communications, filings and submissions proposed
to be sent to any patent office. Subject to Section 12.12, PDL shall
consult with, and obtain the approval of, the JPC before deciding that [****] or Collaboration Product,
provided, however, that if the JPC cannot reach agreement as to whether or not [****].


 


(iii)                            Other
PDL Patent Rights. Decisions regarding the preparation, filing, prosecution
and maintenance of the PDL Patent Rights, to the extent not addressed in Section 12.4(a)(i) or
Section 12.4(a)(ii), shall be made solely by PDL.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


65

















 


(b)                                  Biogen
Idec Patent Rights.


 


(i)                                    Biogen
Idec Target Patent Rights. Decisions regarding the preparation, filing,
prosecution and maintenance of Biogen Idec Target Patent Rights shall be made
by the JPC. Biogen Idec shall be responsible, using in-house counsel or outside
patent counsel  selected by Biogen Idec
and reasonably acceptable to PDL, to implement the decisions of the JPC
regarding the preparation, filing, prosecution and maintenance of such Biogen
Idec Target Patent Rights. Biogen Idec shall provide the JPC with a copy of
each patent application within such Biogen Idec Target Patent Rights as filed,
together with its filing date and serial number. Biogen Idec shall keep the JPC
advised of the status of all communications, actual and prospective filings or
submissions regarding the Biogen Idec Target Patent Rights, and shall give the
JPC an opportunity to review and comment on any such communications, filings
and submissions proposed to be sent to any patent office. [****].


 


(ii)                                Other
Biogen Idec Patent Rights. Decisions regarding the preparation, filing,
prosecution and maintenance of Biogen Idec Patent Rights that are not Biogen
Idec Target Patent Rights shall be made solely by Biogen Idec.


 


(c)                                  Prosecution
of Joint Inventions.


 


(i)                                    Decisions
regarding the preparation, filing and prosecution and maintenance of Joint
Patents shall be made by the JPC. Upon the identification of a Joint Invention,
the JPC shall (1) promptly discuss such Joint Invention, (2) promptly
discuss the desirability of filing a United States patent application covering
such Joint Invention, as well as foreign counterparts, and (3) designate
the Party (the “Implementing Party”) to be responsible for the preparation,
filing, prosecution and maintenance of such Joint Patent Rights. The
Implementing Party shall be responsible, using in-house or outside counsel
reasonably selected by the JPC to implement the decisions of the JPC regarding
the preparation, filing, prosecution and maintenance of such Joint Patent
Rights.   The Implementing Party
shall provide the JPC an opportunity to review and comment upon the text of the
applications relating to such Joint Patent Rights before filing. The
Implementing Party shall provide the JPC with a copy of each patent application
within such Joint Patent Rights as filed, together with notice of its filing
dates and serial number. The Implementing Party shall keep the JPC advised of
the status of all communications, actual and prospective filings or submissions
regarding such Joint Patent Rights, shall provide the JPC an opportunity to
review and comment on such communications, filings and submissions proposed to
be sent to any patent office. The Implementing Party shall also notify the JPC
of the grant of any such Joint Patent Rights. The Implementing Party shall not
cease the prosecution and/or


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


66

















 


maintenance, or modify
the claims, of any such Joint Patent Rights in any country or elect not to file
a patent application within such Joint Patent Rights, unless approved by the
JPC (which approval shall not be unreasonably withheld).


 


(d)                                  Patent
Term Extensions. PDL shall be responsible to implement the decisions of the
JPC regarding patent term extensions, including supplementary protection
certificates and any other extensions that are now or become available in the
future, wherever applicable to PDL Target Patent Rights or Queen Patents that
contain claims that
specifically relate to a Collaboration Target or a Collaboration Product,
in each case to the extent claiming a Collaboration Product. Biogen Idec shall
be responsible to implement the decisions of the JPC regarding patent term
extensions, including supplementary protection certificates and any other
extensions that are now or become available in the future, wherever applicable
to such Biogen Idec Target Patent Rights to the extent claiming a Collaboration
Product. The Implementing Party shall be responsible to implement the decisions
of the JPC regarding patent term extensions, including, without limitation,
supplementary protection certificates and any other extensions that are now or
become available in the future, wherever applicable to Joint Patent Rights to
the extent claiming such Royalty Product. Each Party shall reasonably
cooperate, as requested by the other Party, to implement such decisions of the
JPC. In each instance of patent term extension contemplated by this section,
the Parties agree to take all actions necessary to comply with the then-current
laws and regulations relating to patent term extensions.


 


12.5                        Patent
Interferences/Oppositions


 


(a)                                  Interferences/Oppositions Between the Parties.
If an interference is declared by the U.S. Patent and Trademark
Office, or its foreign equivalent, or an opposition exists between one or more
PDL Target Patent Rights, Biogen Idec Target Patent Rights or Joint Patent
Rights and such declared interference or opposition involves any claims
specifically directed to a Collaboration Product, then the Parties shall in
good faith establish a mutually agreeable process to resolve such interference
or oppositions in a reasonable manner in conformance with all applicable legal
standards, but which prejudices neither Party nor diminishes the value of such
PDL Target Patent Rights, Biogen Idec Target Patent Rights, or Joint Patent
Rights at issue.


 


(b)                                  Oppositions/Interferences
With Third Parties.


 


(i)                                    PDL
Target Patent Rights. Other than as set forth in Section 12.5(a), all
decisions relating to interferences or oppositions lodged against PDL Target
Patent Rights, including whether to initiate such interferences, appropriate
settlement strategy, along with other strategic decisions relating to the PDL
Target Patent Rights, shall be made by PDL, subject to the advice and counsel
of the JPC. Subject to the provisions of this subsection (i), PDL shall
control the conduct of any such interference or opposition. Biogen Idec shall
reasonably cooperate, as requested by PDL, with respect to such opposition or
interference. PDL shall keep the JPC informed of the progress of any opposition
or interference action or proceeding relating to the PDL Target Patent Rights.
PDL shall keep the JPC advised of all communications, actual and prospective
filings or submissions regarding such PDL 


 


67

















 


Target Patent Rights, and
shall provide the JPC an opportunity to review and comment on any such
communications, filing and submissions. Notwithstanding the foregoing, [****].


 


(ii)                                Queen
Patents.             All decisions
relating to interferences or oppositions lodged against the Queen Patents,
including whether to initiate such interferences, appropriate settlement
strategy, along with other strategic decisions relating to the Queen Patents,
shall be made solely by PDL. Notwithstanding [****]. Subject to the provisions
of this subsection (ii), PDL shall control the conduct of any such
interference or opposition. Biogen Idec shall reasonably cooperate, as
requested by PDL, with respect to such opposition or interference. PDL shall
keep the JPC informed of the progress of any opposition or interference action
or proceeding relating to such Queen Patents that contain claims that specifically
relate to a Collaboration Target or a Collaboration Product. PDL shall keep the
JPC advised of all communications, actual and prospective filings or
submissions regarding such claims in such Queen Patents, and shall provide the
JPC an opportunity to review and comment on any such communications, filing and
submissions. Notwithstanding the foregoing, [****].


 


(iii)                            Other
PDL Patent Rights. Decisions relating to interferences or oppositions
lodged against Queen Patents or PDL Patent Rights, including whether to
initiate such interferences, appropriate settlement strategy, and other
strategic decisions relating to the Queen Patents or PDL Patent Rights, to the
extent not addressed in Section 12.5(b)(i) or Section 12.5(b)(ii),
shall be made by PDL.


 


(iv)                               Biogen
Idec Target Patent Rights. Other than as set forth in Section 12.5(a),
all decisions relating to interferences or oppositions lodged against Biogen
Idec Target Patent Rights, including whether to initiate such interferences,
appropriate settlement strategy, along with other strategic decisions relating
to the Biogen Idec Target Patent Rights, shall be made by Biogen Idec, subject
to the advice and counsel of the JPC. Subject to the provisions of this subsection (i),
Biogen Idec shall control the conduct of any such interference or opposition. PDL
shall reasonably cooperate, as requested by Biogen Idec, with respect to such
opposition or interference. Biogen Idec shall keep the JPC informed of the
progress of any opposition or interference action or proceeding relating to the
Biogen Idec Target Patent Rights. Biogen Idec shall keep the JPC advised of all
communications, actual and prospective filings or submissions regarding such
Biogen Idec Target  Patent Rights,
and shall provide the JPC an opportunity to review and comment on any such
communications, filings and submissions. Notwithstanding the foregoing, [****].


 


(v)                                   Other
Biogen Idec Patent Rights. Other than as set forth in Section 12.5(a) and
Section 12.5(b)(iv), all decisions relating to interferences or


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


68

















 


oppositions lodged
against Biogen Idec Patent Rights that are not Biogen Idec Target Patent
Rights, including, without limitation, whether to initiate such interferences,
appropriate settlement strategy, along with other strategic decisions relating
to such Biogen Idec Patent Rights, shall be made by Biogen Idec.


 


(vi)                               Joint
Patent Rights and Third Party Patent Rights. Other than as set forth in Section 12.5(a),
all decisions relating to interferences or oppositions lodged against Joint
Patent Rights, including, without limitation, whether to initiate such
interferences, whether to file oppositions against Third Party Patent Rights
relevant to a Collaboration Product, appropriate settlement strategy, along
with other strategic decisions relating thereto, with respect to the Joint
Patent Rights and Third Party Patent Rights shall be made by the JPC. Upon the
identification of a potential opposition or interference directly involving the
Joint Patent Rights or to the extent such opposition or interference is
specifically directed to a Collaboration Product or Third Party Patent Rights
(each, an “Adversarial Prosecution Action”), the JPC shall (i) promptly
discuss such Adversarial Prosecution Action, including the strategy for
conducting such Adversarial Prosecution Action, and (ii) designate the a
Party (the “Controlling Party”) to be responsible for controlling such
Adversarial Prosecution Action, and determine a reasonable allocation between
the Parties of the cost of such Adversarial Prosecution Action. The Controlling
Party shall be responsible, using outside counsel reasonably selected by the
Controlling Party, to implement the decisions of the JPC regarding such
Adversarial Prosecution Action. The Party that is not the Controlling Party
shall reasonably cooperate, as requested by the Controlling Party, in such
Adversarial Prosecution Action. The Controlling Party shall keep the JPC
informed of the progress of any such Adversarial Prosecution Action. The
Controlling Party shall keep the JPC advised of all communications, actual and
prospective filings or submissions regarding such Adversarial Prosecution
Action, and shall provide the JPC an opportunity to review and comment on any
such communications, filings and submissions. The Controlling Party shall not
settle or consent to an adverse judgment in any such Adversarial Prosecution
Action with respect to the Joint Patent Rights or Third Party Patent Rights,
unless approved by the JPC (which approval shall not be unreasonably withheld).


 


12.6                        Initial
Filings if Made Outside of the United States.  The Parties agree to
use reasonable efforts to ensure that any Patent Right within the PDL Target
Patent Rights, Biogen Idec Target Patent Rights or Joint Patent Rights that is
filed outside of the United States prior to a United States filing will be in a
form sufficient to establish the date of original filing as a priority date for
the purposes of a subsequent United States filing.


 


12.7                        Enforcement of Patent Rights.


 


(a)                                  Notification.
If either Party learns of any substantial and continuing infringement of PDL
Target Patent Rights, Biogen Idec Target Patent Rights or Joint Patent Rights
by a Third Party making, using, offering for sale, selling or importing a
product in or outside of the applicable Field, such Party shall promptly notify
the other Party and shall provide such other Party with available evidence of
such infringement.


 


69

















 


(b)                                  Enforcement
of Patent Rights.


 


(i)                                    PDL
Target Patent Rights. Subject to the further provisions of this subsection (b),
decisions regarding the enforcement of PDL Target Patent Rights in an action
against an infringement by a Third Party of claims licensed to Biogen Idec
under Section 11.1, including the defense of a declaratory judgment action
with respect to such potential infringement (each, an “Enforcement
Action”) shall be made by PDL. PDL shall have the first right to
implement at its sole expense any Enforcement Actions relating to the PDL
Target Patent Rights. Biogen Idec shall reasonably cooperate, as requested by
PDL, with respect to such Enforcement Action. PDL shall keep the JPC informed
of the progress of any action or proceeding to enforce the PDL Target Patent
Rights. PDL shall keep the JPC advised of all communications, actual and prospective
filings or submissions regarding such PDL Target Patent Rights, and shall
provide the JPC an opportunity to review and comment on any such
communications, filing and submissions. PDL shall not settle or consent to an
adverse judgment in any action or proceeding to enforce such PDL Target Patent
Rights that admits the invalidity or unenforceability of such PDL Target Patent
Rights unless approved by the Joint Steering Committee (which approval shall
not be unreasonably withheld). If PDL fails to institute such a suit or take
such action within [****] after a request by Biogen Idec to do so, then Biogen
Idec shall have the right at its sole discretion to bring and control such
Enforcement Action in the name of either or both Parties, subject to Section 12.10.
Such prosecution or defense shall be at Biogen Idec’s sole expense unless PDL
opts, at its discretion, to reimburse Biogen Idec for a portion ([****]) of all
costs or expenses incurred by Biogen Idec with respect to such prosecution or
defense.


 


(ii)                                Queen
Patents.             Decisions regarding
Enforcement Actions with respect to Queen Patents shall be made solely by PDL. [****]
shall be carried out in accordance with subsection (i) above and Section 12.10.
For clarity, an Enforcement Action that involves [****] and carried out in
accordance subsection (i), Section 12.9, and Section 12.12.


 


(iii)                            Additional
PDL Patent Right Enforcement. Decisions regarding Enforcement Actions as
well as actions for infringement outside the applicable Field and declaratory
judgment suits regarding potential infringement outside the applicable Field,
with respect to PDL Patent Rights and Queen Patents, to the extent and so long
as such Enforcement Actions are not addressed in 12.7(b)(i) or (b)(ii),
shall be made by PDL. PDL shall have the right, using outside counsel selected
by PDL, to bring and control such Enforcement Actions at its sole expense. Biogen
Idec shall reasonably cooperate, as requested by PDL, with respect to such
Enforcement Action. PDL shall keep the Joint Patent Committee informed of the
progress of any such Enforcement Action with respect to the PDL Patent Rights
that are not PDL Target 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


70

















 


Patent Rights or Queen Patents. Notwithstanding the terms of Section 12.7(b)(vii),
[****].


 


(iv)                               Biogen
Idec Target Patent Rights. Subject to the further provisions of this subsection (b),
decisions regarding the enforcement of Biogen Idec Target Patent Rights in an
action against an infringement by a Third Party, including the defense of a
declaratory judgment action with respect to such potential infringement shall
be made by Biogen Idec. Biogen Idec shall have the first right to implement at
its sole expense any Enforcement Actions relating to the Biogen Idec Target
Patent Rights. PDL shall reasonably cooperate, as requested by Biogen Idec,
with respect to such Enforcement Action. Biogen Idec shall keep the JPC
informed of the progress of any action or proceeding to enforce the Biogen Idec
Target Patent Rights. Biogen Idec shall keep the JPC advised of all
communications, actual and prospective filings or submissions regarding such
Biogen Idec Target Patent Rights, and shall provide the JPC an opportunity to
review and comment on any such communications, filing and submissions. Biogen
Idec shall not settle or consent to an adverse judgment in any action or proceeding
to enforce such Biogen Idec Target Patent Rights that admits the invalidity or
unenforceability of such Biogen Idec Target Patent Rights unless approved by
the Joint Steering Committee (which approval shall not be unreasonably
withheld). If Biogen Idec fails to institute such a suit or take such action
within [****] after a request by PDL to do so, then PDL shall have the right at
its sole discretion to bring and control such Enforcement Action in the name of
either or both Parties, except to the extent that such prosecution or defense
would conflict with rights granted by Biogen Idec to a Third Party. Such
prosecution or defense shall be at PDL’s sole expense unless Biogen Idec opts,
at its discretion, to reimburse PDL for a portion ([****]) of all costs or
expenses incurred by Biogen Idec with respect to such prosecution or defense.


 


(v)                                   Additional
Biogen Idec Patent Right Enforcement. Decisions regarding Enforcement
Actions with respect to Biogen Idec Patent Rights that are not Biogen Idec
Target Patent Rights shall be made by Biogen Idec. Biogen Idec shall have the
right, using outside counsel selected by Biogen Idec, to bring and control such
Enforcement Actions at its sole expense. PDL shall reasonably cooperate, as
requested by Biogen Idec, with respect to such Enforcement Action. Biogen Idec
shall keep the Joint Patent Committee informed of the progress of any such
Enforcement Action with respect to the Biogen Idec Patent Rights that are not
Biogen Idec Target Patent Rights. Notwithstanding the terms of Section 12.7(b)(vii),
Biogen Idec shall retain all Recoveries received from a Third Party in
connection with such Enforcement Action.


 


(vi)                               Joint
Patent Rights. Decisions regarding Enforcement Actions with respect to the
Joint Patent Rights shall be made by the JPC, upon


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


71

















 


consultation with the
Joint Steering Committee. Upon the identification of an infringement of Joint
Patent Rights with respect to a Collaboration Product, the JPC shall (i) promptly
discuss such infringement, (ii) promptly discuss the strategy for enforcing
such Joint Patent Rights, and (iii) designate the Controlling Party to be
responsible for controlling an Enforcement Action with respect to such Joint
Patent Rights, and determine a reasonable allocation between the Parties of the
costs of such Enforcement Action. The Controlling Party shall be responsible,
using outside counsel mutually acceptable to both Parties, to implement the
decisions of the JPC regarding such Enforcement Action. The non-Controlling
Party shall reasonably cooperate, as requested by the Controlling Party, in
such Enforcement Action. The Controlling Party shall keep the Joint Steering
Committee and the JPC informed of the progress of any action or proceeding to
enforce the Joint Patent Rights. The Controlling Party shall keep the JPC
advised of all communications, actual and prospective filings or submissions
regarding such Joint Patent Rights, and shall provide the JPC an opportunity to
review and comment on any such communications, filing and submissions. The
Controlling Party shall not settle or consent to an adverse judgment in any
such Enforcement Action with respect to the Joint Patent Rights, unless
approved by the Joint Steering Committee (which approval shall not be
unreasonably withheld).


 


(vii)                           Allocation
of Recoveries. All cash amounts (plus the fair market value of all non-cash
consideration) received by a Party or its Affiliates from a Third Party in
connection with the final judgment, award or (to the extent a sublicense to
such Third Party would require the consent of the other Party under this
Agreement) settlement of such Enforcement Action (“Recoveries”) shall
first be applied to reimbursement of the unreimbursed legal fees and expenses
of the Parties in connection with such Enforcement Action, and then the
remainder shall be divided equally between the Parties, except that [****], [****],
such remainder shall be shared [****] to the [****], and [****] to the [****]; provided
that the [****] shall receive such share only to the extent the
Recoveries were obtained with respect to Patents of such Party (e.g., [****]).


 


(viii)                       Representation
by Counsel. Each Party shall always have the right to be represented by
counsel of its own selection and its own expense in any suit or other action
instituted by the other Party pursuant to this Section 12.7 for
infringement in a Field. The amounts borne by such Party pursuant to this Section 12.7(b)(viii) shall
not count towards the determination of the allocation between the Parties of
any remaining recovery pursuant to Section 12.7(b)(vii).


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


72

















 


12.8                        Defense of Infringement
Actions.


 


(a)                                  If
PDL and/or Biogen Idec are defendant(s) named in a patent infringement suit
filed by a Third Party concerning the development, manufacture, production,
use, importation, offer for sale, or sale of Collaboration Products in the Field
(a “Defensive Action”) decisions regarding such Defensive Actions shall be made
by the JPC, upon consultation with the Joint Steering Committee. Upon the
identification of a Defensive Action with respect to a Collaboration Product,
the JPC shall (i) promptly discuss such Defensive Action, (ii) promptly
discuss the strategy for defending such suit, and (iii) designate the
Controlling Party to be responsible for controlling said Defensive Action, and
determine a reasonable allocation between the Parties of the costs of such
Defensive Action. The Controlling Party shall be responsible, using outside
counsel mutually acceptable to both Parties, to implement the decisions of the
JPC regarding such Defensive Action. The non-Controlling Party shall reasonably
cooperate, as requested by the Controlling Party, in such Defensive Action. The
Controlling Party shall keep the Joint Steering Committee and the JPC informed
of the progress of any action or proceeding in the Defensive Action. The
Controlling Party shall keep the JPC advised of all communications, actual and
prospective filings or submissions regarding such Defensive Action, and shall
provide the JPC an opportunity to review and comment on any such
communications, filing and submissions. The Controlling Party shall not settle
or consent to an adverse judgment in any such Defensive Action, unless approved
by the Joint Steering Committee (which approval shall not be unreasonably
withheld).


 


(b)                                  During
the term of this Agreement, each Party shall bring to the attention of the
other Party all information regarding potential infringement of Third Party
intellectual property rights via the development, manufacture, production, use,
importation, offer for sale, or sale of Collaboration Products in a Field
throughout the world. The Parties shall discuss such information and decide how
to handle such matter.


 


12.9                        Third
Party Intellectual Property.


 


(a)                                  In
the event that PDL or Biogen Idec (the “Acquiring Party”) proposes to
apply to a Collaboration Product Technology that the Acquiring Party obtained
from a Third Party that is not included automatically within the definition of
Biogen Idec Technology or PDL Technology prior to the Effective Date (and hence
included in the licenses granted by the Acquiring Party pursuant to Article 11)
or otherwise acquired by the Acquiring Party, the Acquiring Party shall
disclose the same to the Joint Steering Committee, including any royalty or
other payment obligations determined in accordance with United States GAAP that
would apply to the Collaboration Product as a result of the Development or
Commercialization of such


 


73

















 


Collaboration Products
hereunder. The Joint Steering Committee shall determine, [****] whether or not
the Joint Steering Committee agrees that the intellectual property so acquired
should be applied to the Collaboration Products, and if the Joint Steering
Committee so determines, the agreement under which the Acquiring Party acquires
such intellectual property shall be a Third Party License for purposes of this
Agreement. To the extent the agreement is not so included within the Third
Party Licenses hereunder, the subject matter of such agreement shall not be
within the definition of PDL Technology or Biogen Idec Technology hereunder
(and therefore the licenses granted by the Acquiring Party pursuant to Article 11
shall not include such subject matter).


 


(b)                                  Manufacturing
Technology.


 


(i)                                    PDL-Lead
Manufacturer. Notwithstanding the foregoing, with respect to Collaboration
Products or Royalty Products for which PDL is the Manufacturing Party under Article 8
above, PDL shall have the right to decide which Third Party Technology will be
used in such Manufacturing, and any agreement pursuant to which PDL acquired or
acquires such technology shall be deemed a Third Party License.


 


(ii)                                Biogen
Idec-Lead Manufacturer. Notwithstanding the foregoing, with respect to
Collaboration Products or Royalty Products for which Biogen Idec is the
Manufacturing Party under Article 8 above, Biogen Idec shall have the
right to decide which Third Party Technology will be used in such
Manufacturing, and any agreement pursuant to which Biogen Idec acquired or
acquires such technology shall be deemed a Third Party License.


 


(c)                                  Third
Party Licenses. Notwithstanding the provisions of this Article 12, the
rights and obligations of the Parties under this Article 12, with respect
to Patents licensed pursuant to a Third Party License, shall be subject to the
rights of the applicable Third Party licensor/licensee pursuant to such Third
Party License and the applicable Parties’ obligations to such Third Party
pursuant to such Third Party License. Without limiting the foregoing, the
Parties agree and acknowledge that the provisions set forth in this Article 12
shall be subject to the following Third Party License provisions (as such Third
Party Licenses and specific provisions may be amended from time to time upon
notice to and consent of the other Party, if required, pursuant to Section 11.5(c)(ii))
and such provisions shall supersede anything to the contrary contained in this
Agreement:  (i) [****]; (ii) [****];
(iii) Article 5 of the UCSD License Agreement;  (iv) [****]; (v) [****]; (vi) [****];
(vii) [****]; (viii) [****]; and (ix) [****]. The Parties further
agree and acknowledge that PDL does not have any rights to prosecute or enforce
the Patent


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


74

















 


Rights licensed to it
pursuant to the following Third Party Licenses and therefore no portion of Article 12
shall be interpreted as granting Biogen Idec or the JPC or JSC rights to file,
prosecute (including interferences and oppositions), maintain, enforce or
defend such Patents or receive information or provide input with respect to
such Patent Rights:  [****]; [****]; [****]; [****];
and [****].


 


12.10                 Rights pursuant
to the [****] Agreements.


 


(a)                                  The
Parties acknowledge that, pursuant to the [****] Agreements, [****] has certain
rights to file, prosecute (including interferences and oppositions), maintain,
enforce and defend certain PDL Patent Rights that are licensed by or to PDL
pursuant to the [****] Agreements. Notwithstanding anything to the contrary,
Biogen Idec’s, JPC’s and JSC’s rights pursuant to this Article 12 with
respect to such PDL Patent Rights are subject to such [****] rights to file,
prosecute, maintain, enforce and defend the certain PDL Patent Rights that are
licensed by or to PDL pursuant to [****] Agreement. For clarity, PDL shall not
be required pursuant to this Article 12 to provide Biogen Idec or the JPC
or JSC with any patent filing, prosecution (including interferences and
oppositions), maintenance, enforcement or defense associated-rights that
conflict with [****] rights under the [****] Agreements or that would
constitute a breach of PDL’s obligations to [****] under the [****] Agreements,
provided however, no additional rights shall accrue to Biogen Idec unless and
until Biogen Idec obtains a license pursuant to Section 3.8. The Parties
acknowledge that certain of Biogen Idec’s, JPC’s and JSC’s rights under this Article 12
that relate to PDL Patent Rights that are licensed by or to PDL pursuant to the
[****] Agreements. The Parties further acknowledge that such rights of Biogen
Idec, JPC or JSC derive solely from those rights retained by PDL under the [****]
Agreements.


 


(b)                                  PDL
hereby agrees and acknowledges that, notwithstanding any other provisions of
this Agreement, Biogen Idec will not be obligated to pay any royalties due to [****]
pursuant to the [****] Agreements for sales of Collaboration or Royalty
Products, except as expressly stated in this Agreement.


 


12.11                 Patent Marking.
Each Party agrees to comply with the patent marking statutes in each country in
which Collaboration Products or Royalty Products are sold by such Party, its
Affiliates and/or sublicensees. Notwithstanding the foregoing, prior to the
launch of each Product, the JPC will formulate a marking strategy for such
Product in cooperation with qualified outside counsel and in cooperation with
the guidelines of the appropriate governmental agencies regulating the
Manufacture or sale of Products, including determining the appropriate patent
marking, if any, to be used with such Product.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


75














 


12.12                 Limited Rights to
Humanization Technology Claims in Queen Patents. Nothing in this Article 12
shall be interpreted as granting Biogen Idec, the JPC or the JSC any rights
with respect to the filing, prosecution (including interferences and oppositions),
maintenance, enforcement or defense of primarily those claims in the Queen
Patents that are directed toward the humanization of antibodies or humanized
antibodies in general (as opposed to particular humanized antibodies or
humanized antibodies directed at a particular target). For example and without
limiting the foregoing, PDL shall not have any obligation to: (a) keep
Biogen Idec or the JPC advised of the status of communications, actual and
prospective filings or submissions primarily regarding such claims; (b) consult
with Biogen Idec or the JPC on matters that primarily relate to such claims; (c) give
Biogen Idec or the JPC access to or an opportunity to review and comment on any
portion of patent office or patent litigation communications, filings or
proposed submissions that pertain primarily to such claims; or (d) obtain
JSC approval of a settlement or consent to an adverse judgment with respect to
any admission of invalidity or unenforceability primarily of such claims.


 


12.13                 Trademark
Selection and Ownership.


 


(a)                                  Ownership
of Trademarks. The Responsible Commercialization Party for the North
American Territory, as the “Responsible Trademark Party,” shall own, throughout
the world, all trademarks and trade dress, and all registrations therefor, selected
under Section 12.13(b) and used or intended to be used on or in
connection with a Product under this Agreement (the “Product Trademarks”). Accordingly,
with respect to the Existing Products, [****] shall be the Responsible
Trademark Party for [****], and [****] shall be the Responsible Trademark Party
for [****] and [****]. All goodwill attributable to a Product Trademark
generated by the Commercialization of a Product under this Agreement bearing a
Product Trademark shall inure to the benefit of the Responsible Trademark
Party.


 


(b)                                  Selection
and Procurement of Trademarks. The Responsible Trademark Party for a
Product to be Commercialized under this Agreement shall select, subject to
approval by the Joint Commercialization Committee, a minimum of [****]
trademarks in each of the North American Territory and EU Territory and
appropriate corresponding trade dress for such Product (whether as a
Collaboration Product or Royalty Product). Any determination regarding the
selection of such trademarks and trade dress shall take into account the
objectives of the Parties, both within and outside the Collaboration, when
making any determinations and exercising any rights it may have with respect to
selecting the trademark and trade dress for a Product. All uses of trademarks
and trade dress to identify and/or in connection with the Commercialization of
a Product under this Agreement shall comply with all applicable laws
(including,


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


76

















 


without limitation, those
laws and regulations particularly applying to the proper use and designation of
trademarks in the applicable countries).


 


(c)                                  Prosecution
and Enforcement; Expenses. The Responsible Trademark Party shall be
responsible for procurement and maintenance of trademark registrations for the
Product Trademarks throughout the Territory, except that the Responsible
Trademark Party may cease trademark registration procurement activities for any
Product Trademark in any country in the Royalty Territory provided it first
offers the other Party the opportunity to assume such activities at its own
expense. All expenses incurred by the Responsible Trademark Party with respect
to the preparation, filing, prosecution, maintenance and enforcement of the
Product Trademarks for the Profit Sharing Territory shall be included in Other
Out-of-Pocket Costs and solely for the Royalty Territory shall be borne at the
Independent Development  Party’s sole
expense.


 


(d)                                  Use
of the Product Trademarks. To effectuate the purposes of this Agreement,
the Responsible Trademark Party shall grant to the other Party, a non-exclusive,
non-royalty bearing license (with the right to grant sublicenses) pursuant to a
separate agreement, to use each Product Trademark solely in connection with the
Commercialization of Products under this Agreement. The Party that is not the
Responsible Trademark Party, its Affiliates and its sublicensees will comply
with the Responsible Trademark Party’s then-current trademark and trade dress
guidelines for trademarks and trade dress and shall have the right to monitor
the quality of the Products on which a Product Trademark appears or which
incorporates a Product Trademark in the form of trade dress in accordance with
reasonable procedures to be agreed by the Parties. The Party that is not the
Responsible Trademark Party, its Affiliates and sublicensees shall use the
Product Trademarks only in connection with the Commercialization of Products
under this Agreement in the Territory in accordance with the licenses to be
granted herein. The Responsible Trademark Party, or the Party commercializing
an Independent Product or Royalty Product as the case may be, shall provide all
materials (including without limitation advertising or promotional materials)
that incorporate the Product Trademarks or a Party’s house marks to the
Responsible Trademark Party for prior review and approval, not to be
unreasonably withheld.


 


(e)                                  House
Marks. In the event that the Parties mutually agree to permit a Party to
use the house marks of the other Party in connection with the Commercialization
and/or Co-Promotion of Products under this Agreement, the Parties will
establish mutually acceptable terms for the usage of such house marks.


 


(f)                                    Acknowledgement
of Ownership Rights. Each Party acknowledges the sole ownership by the
other Party and validity of all trademarks, trade dress, logos and slogans
owned by the other Party and used or intended to be used on or in connection
with the Commercialization of a Product under this Agreement. Each Party agrees
that it will not at any time during or after the Term assert or claim any interest
in or do anything which may adversely affect the validity or enforceability of
any trademark, trade dress, logo or slogan owned by the other Party and used or
intended to be used on or in connection with Commercialization of a Product
under this Agreement. Neither Party will register, seek to register or cause to
be registered any


 


77

















 


trademarks, trade dress,
logos or slogans owned by the other Party and used or intended to be used on or
in connection with the Commercialization of a Product under this Agreement or
any variation thereof, under any law providing for registration of trademarks,
service marks, trade names, fictitious names or similar laws, as an Internet
domain name, or in the name of a corporation, partnership, limited liability
company or other entity, without the other Party’s prior written consent.


 


(g)                                 Use
of Trademark Designations. The TM designation may be used in conjunction
with each Product Trademark within the Territory. Once registrations issue, the
® designation may be used in connection with the Product Trademarks. An
appropriate statutory notice of trademark ownership shall be affixed to or
imprinted on any material wherever a Party’s house marks or Product Trademarks
are used. The Responsible Trademark Party’s ownership of the Product Trademarks
shall be identified on all materials on which they appear. The exact language
for identification of ownership shall be in accordance with branding and
implementation guidelines to be agreed on by the Parties.


 


(h)                                 Infringement
of Product Trademarks.


 


(i)                                    Procedure.
In the event that either Party becomes aware of (i) actual
infringement of a Product Trademark  in the
Territory; (ii) a mark or name confusingly similar to a Product Trademark
in the Territory; or (iii) any unfair trade practices, trade dress
imitation, passing off, or like offenses, in the Territory that relate to the
Product Trademarks, such Party shall promptly so notify the other Party in
writing. The Responsible Trademark Party shall have the right, but not the
obligation, at its sole cost and expense, to initiate, prosecute, and control
an infringement action or file any other appropriate action or claim related to
such infringement of the Product Trademark against any Third Party. If the
Responsible Trademark Party fails to bring any such infringement action within
a period of [****] after delivery of the notice set forth above, then the other
Party shall have the right, but not the obligation, at its sole cost and
expense, to initiate, prosecute, and control an infringement action or file any
other appropriate action or claim related to such infringement of the Product
Trademark against any Third Party. In either event, the Party not bringing any
such action (i) shall have the right (at its own expense) to participate
in such action and to be represented by counsel of its own choice, and (ii) agrees,
at the request and expense of the Party bringing such action, to be joined as a
Party to the suit and to provide reasonable assistance in any such action. The
Party controlling such action shall take all reasonable and appropriate steps
to protect, defend, and maintain the Product Trademarks for use by the Parties
and shall have the right to control settlement of such action; provided,
however, that no settlement shall be entered into without the written consent
of the other Party, not to be unreasonably withheld.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


78

















 


(ii)                                Costs.
The costs associated with such defense for the Profit Sharing Territory
shall be included in [****] as set forth in Exhibit C and the costs
associated solely with the Royalty Territory shall be borne by the Independent
Development Party. Any damages or monetary award recovered shall be allocated
as follows:  All cash amounts (plus the
fair market value of all non-cash consideration) received by a Party or its
Affiliates from a Third Party in connection with the final judgment, award or
settlement of such action (“Recoveries”) shall first be applied to
reimbursement of the unreimbursed legal fees and expenses of the Parties in
connection with such action, and then the remainder shall be [****].


 


12.14                 Third Party
Trademark Claims Based on Use of the Trademarks.


 


If a
claim is brought by a Third Party that a Party’s use of the Product Trademarks
infringes such Third Party’s trademarks, the Party against which (or against
whose Affiliate, as the case may be) the action is brought will give prompt
written notice to the other Party of such claim. The Responsible Trademark
Party shall defend any such claim and any resulting suit brought in the Territory
with respect to the use of the Product Trademark, provided the costs associated
with such defense for the Profit Share Territory shall be included in [****] as
set forth in Exhibit C and the costs associated solely with the Royalty
Territory shall be borne by the [****]. Any damages or monetary award recovered
shall be allocated as follows:  All cash
amounts (plus the fair market value of all non-cash consideration) received by
a Party or its Affiliates from a Third Party in connection with the final
judgment, award or settlement of such defense (“Recoveries”) shall first
be applied to reimbursement of the unreimbursed legal fees and expenses of the
Parties in connection with such defense, and then the remainder shall be [****],
except that [****]. The Responsible Trademark Party shall not settle any claim
or suit in a manner that would adversely affect the other Party without
obtaining the other Party’s prior written consent, which shall not be
unreasonably withheld.


 


ARTICLE 13



REPRESENTATIONS AND WARRANTIES


 


13.1                        Mutual
Representations and Warranties. Each Party hereby represents and warrants
to the other Party as of August 2, 2005:


 


(a)                                  Such
Party is a corporation or entity duly organized and validly existing under the
laws of the state or other jurisdiction of its incorporation or formation;


 


(b)                                  The
execution, delivery and performance of this Agreement by such Party has been
duly authorized by all requisite corporate action;


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


79

















 


(c)                                  Such
Party has the power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and such performance does not conflict with
or constitute a breach of any agreement of such Party with a Third Party;


 


(d)                                  Subject
to Section 11.5(b)(iii) such Party has the right to grant the rights
and licenses described in Article 11; and


 


(e)                                  Such
Party has and shall maintain the resources and capability to perform its
obligations hereunder either alone or together with one or more of its
Affiliates whose performance it can cause to be made available to perform
obligations hereunder.


 


13.2                        Representations
by PDL. PDL hereby represents and warrants to Biogen Idec as of August 2,
2005:


 


(a)                                  Prior
to August 2, 2005, it has provided a complete copy of the [****]
Agreements and of all Third Party Licenses in effect as of the Effective Date;


 


(b)                                  [****];


 


(c)                                  it
has not previously assigned, transferred, conveyed or otherwise encumbered its
right, title and interest in PDL Technology in the Field;


 


(d)                                  [****];


 


(e)                                  [****];


 


(f)                                    [****];


 


(g)                                 [****];


 


(h)                                 [****];
and


 


(i)                                    [****].


 


As used and except as otherwise set forth
herein, “PDL’s knowledge” means the actual knowledge, after reasonable inquiry,
as of the Effective Date, of any executive officer of PDL with operational
responsibility for the subject matter of the applicable representation or
warranty.


 


Without limiting the foregoing, the Parties
agree and acknowledge that the representations made by PDL in this Section 13.2
shall not be deemed to be representations made by or on behalf of [****].


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


80

















 


13.3                        Disclaimer.
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTION 13.1 AND 13.2, EACH
PARTY MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND
EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES
OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, ARISING FROM A COURSE OR DEALING, USAGE OR
TRADE PRACTICES, OR ANY WARRANTY AS TO THE VALIDITY OR ANY PATENTS OR THE
NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTIES, IN
ALL CASES WITH RESPECT THERETO.


 


13.4                        Limitation
of Liability. NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER
PARTY ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
CONNECTION WITH THIS AGREEMENT, EACH PARTY’S PERFORMANCE OR LACK OF PERFORMANCE
HEREUNDER, OR ANY LICENSE GRANTED HEREUNDER, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. THE FOREGOING LIMITATION SHALL NOT LIMIT EITHER PARTY’S
OBLIGATION TO THE OTHER PARTY UNDER ARTICLES 14 AND 15.


 


13.5                        Essential
Basis. The Parties acknowledge and agree that the disclaimers, exclusions
and limitations of liability set forth in this Article 13 form an
essential basis of this Agreement, and that, absent any of such disclaimers,
exclusions or limitations of liability, the terms of this Agreement, including
the economic terms, would be substantially different.


 


ARTICLE 14



CONFIDENTIALITY


 


14.1                        Generally.
During and for five (5) years after the Term of this Agreement, each
Party (i) shall maintain in confidence all Confidential Information of the
other Party; (ii) shall not use such Confidential Information for any
purpose except as permitted by this Agreement; and (iii) shall not
disclose such Confidential Information to anyone other than those of its
Affiliates, sublicensees, prospective sublicensees, employees, consultants,
agents or subcontractors who are bound by written obligations of nondisclosure
and non-use no less stringent than those set forth in this Article 14 and
to whom such disclosure is necessary in connection with such Party’s activities
as contemplated in this Agreement. Each Party shall ensure that such Party’s
Affiliates, sublicensees, prospective sublicensees, employees, consultants,
agents and subcontractors comply with these obligations. Each Party shall
notify the other promptly on discovery of any unauthorized use or disclosure of
the other’s trade secrets or proprietary information.


 


14.2                        Exceptions.
The obligations of confidentiality, non-disclosure, and non-use set forth in Section 14.1
shall not apply to the extent the receiving Party (the


 


81

















 


“Recipient”)
can demonstrate that the disclosed information (i) was in the public
domain at the time of disclosure to the Recipient by the other Party, or
thereafter entered the public domain, in each case other than as a result of
actions of the Recipient, its Affiliates, employees, licensees, agents or
subcontractors, in breach of this Agreement; (ii) was rightfully known by
the Recipient or its Affiliates (as shown by its written records) prior to the
date of disclosure to the Recipient by the other Party; or (iii) was
received by the Recipient or its Affiliates on an unrestricted basis from a
Third Party rightfully in possession of such information and not under a duty
of confidentiality to the other Party. Notwithstanding any other provision of
this Agreement, Recipient’s disclosure of Confidential Information shall not be
prohibited if such disclosure:  (a) is
in response to a valid order of a court or other governmental body, provided
that Recipient provides the other Party with prior written notice of such
disclosure in order to permit the other Party to seek a protective order or
other confidential treatment of such Confidential Information; or (b) is
otherwise required by applicable law or regulation, or rules of a
nationally recognized securities exchange.


 


14.3                        Publications.


 


(a)                                  Prior
to public disclosure or submission for publication of a proposed academic,
scientific or other publication or presentation that contains or references the
results of any scientific or clinical activity relating to any Development
Program or Collaboration Product, or any Patents or Know-How related thereto,
the Party disclosing or submitting such proposed publication (“Submitting Party”) shall send the other party (“Responding Party”) by expedited delivery a copy of the
proposed publication to be submitted and shall allow the Responding Party a
reasonable time period (but no less than forty-five (45) days from the date of
confirmed receipt) in which to determine whether the proposed publication
contains subject matter for which patent protection should be sought (prior to
publication of such proposed publication) for the purpose of protecting an
invention and/or whether the proposed publication contains the Confidential
Information of the Responding Party. Following the expiration of the forty-five
(45) day review period, the Submitting Party shall be free to submit such proposed
publication for publication and publish or otherwise disclose to the public
such scientific or clinical results, subject to the procedures set forth in Section 14.3(b).


 


(b)                                  If
the Responding Party believes that the subject matter of the proposed publication
contains Confidential Information or a patentable invention of the Responding
Party, then prior to the expiration of the applicable time period for review,
the Responding Party shall notify the Submitting Party in writing of its
determination that such proposed publication contains such information or
subject matter for which patent protection should be sought. On receipt of such
written notice from the Responding Party, the Submitting Party shall delay
public disclosure of such information or submission of the proposed publication
for an additional period of ninety (90) days to permit preparation and filing
of a patent application on the disclosed subject matter. The Submitting Party
shall thereafter be free to publish or disclose such information, except that
the Submitting Party may not disclose any Confidential Information of the
Responding Party in violation of Sections 14.1 and 14.2 hereof.


 


82

















 


14.4                        Publicity.
The Parties agree that the public announcement of the execution of this
Agreement shall be substantially in the form of a mutually agreed press release.
Any other publication, news release or other public announcement relating to
this Agreement or to the performance hereunder, shall first be reviewed and
approved by both Parties unless such publication, news release or other public
announcement contains information previously approved by the other Party for
release hereunder; provided, however, that any disclosure which is required by
law, or by the rules of a nationally recognized securities exchange, as
advised by the disclosing Party’s counsel may be made without the prior consent
of the other Party, although the other Party shall be given prompt notice of
any such legally required disclosure and to the extent practicable shall
provide the other Party an opportunity to comment on the proposed disclosure.


 


ARTICLE 15



INDEMNIFICATION


 


15.1                        Indemnification
by PDL.


 


(a)                                  PDL
agrees to indemnify, hold harmless and defend Biogen Idec and its Affiliates,
directors, officers, employees and agents (the “Biogen Idec
Indemnitees”) from and against any and all Third Party suits,
claims, actions, demands, liabilities, expenses and/or losses (including
attorneys’ fees, court costs, witness fees, damages, judgments, fines and
amounts paid in settlement) (“Losses”) [****],
but [****].


 


(b)                                  PDL
agrees to indemnify, hold harmless and defend the Biogen Idec Indemnitees from
and against any and all Losses [****] (i) [****], or (ii) [****],
except [****].


 


15.2                        Indemnification
by Biogen Idec.


 


(a)                                  Biogen
Idec shall indemnify, hold harmless and defend PDL and its Affiliates
directors, officers, employees and agents (the “PDL
Indemnitees”) from and against any and all Losses, [****], but [****],
but not [****]. [****].


 


(b)                                  Biogen
Idec agrees to indemnify, hold harmless and defend the PDL Indemnitees from and
against any and all Losses [****], except [****].


 


15.3                        Procedure.
In the event of a claim by a Third Party against a Party entitled to
indemnification under this Agreement (“Indemnified Party”),
the Indemnified


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


83

















 


Party shall promptly
notify the other Party (“Indemnifying Party”)
in writing of the claim and the Indemnifying Party shall undertake and solely
manage and control, at its sole expense, the defense of the claim and its
settlement. The Indemnified Party shall cooperate with the Indemnifying Party,
including, as requested by the Indemnifying Party entering into a joint defense
agreement. The Indemnified Party may, at its option and expense, be represented
in any such action or proceeding by counsel of its choice. The Indemnifying
Party shall not be liable for any litigation costs or expenses incurred by the
Indemnified Party without the Indemnifying Party’s written consent. The
Indemnifying Party shall not settle any such claim unless such settlement fully
and unconditionally releases the Indemnified Party from all liability relating
thereto, unless the Indemnified Party otherwise agrees in writing.


 


15.4                        Insurance.
Each Party, at its own expense, shall maintain product liability insurance in
an amount consistent with industry standards for a company of similar standing
during the Term. Each Party shall provide [****] prior written notice of any
cancellation of its insurance program. Each Party shall provide the other Party
with a certificate of insurance evidencing product liability coverage.


 


ARTICLE 16



TERM AND TERMINATION; EFFECTS OF TERMINATION


 


16.1                        Term. The
term of this Agreement shall begin on the Effective Date and, unless earlier
terminated in accordance with the terms of this Article 16, will expire on
the date on which neither Party has nor will have any additional payment
obligations to the other Party under this Agreement (the “Term”).


 


16.2                        Termination
for Breach.


 


(a)                                  Breach.
If a Party materially breaches its obligations under this Agreement with
respect to a Collaboration Product or Royalty Product, which breach is not
cured within [****] after written notice thereof from the non-breaching Party
(or if such breach is not capable of cure within such period, which breach the breaching
Party is not making diligent good faith efforts to cure), then upon further
express written notice from the non-breaching Party, the breaching Party
automatically (and without further action on its part) shall be deemed to have [****]
(a “Breaching Party”); provided however that the breaching Party shall be
entitled to receive no more than [****] of the royalties due to a
Non-Developing Party hereunder. This preceding sentence shall not, however,
limit in any manner the non-breaching Party’s other remedies for breach. The
Parties acknowledge and agree that failure to exercise any right or option with
respect


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


84

















 


to any Collaboration
Product or to take any action expressly within the discretion of a Party shall
not be deemed to be material breach hereunder.


 


(b)                                  Breaching
Party Obligations. A Breaching Party shall, with respect to the
Collaboration Product or Royalty Product as to which it is the Breaching Party (i) notwithstanding
the provisions of this Agreement to the contrary, the Breaching Party shall be [****],
(ii) in addition to the obligations specified in [****] the Breaching  Party shall [****], and (iii) the
Breaching Party shall [****].


 


16.3                        Bankruptcy.
All rights and licenses granted under this Agreement by one Party to the other
Party are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the United States Bankruptcy Code (the “Bankruptcy Code”),
licenses of rights to “intellectual property” as defined under Section 101(35A)
of the Bankruptcy Code. The Parties agree that a Party shall retain and may
fully exercise all of its rights and elections under the Bankruptcy Code in the
event of a bankruptcy by the other Party. The Parties further agree that in the
event of the commencement of a bankruptcy proceeding by or against one Party
under the Bankruptcy Code, the other Party shall be entitled to complete access
to any such intellectual property pertaining to the rights granted in the
licenses hereunder of the Party by or against whom a bankruptcy proceeding has
been commenced and all embodiments of such intellectual property.


 


16.4                        Change of
Control.


 


(a)                                  In
the event a Party undergoes a Change of Control (the “Acquired Party”), the
other Party (the “Non-Acquired Party”) shall have the right, at any time within
[****] following the closing of such Change of Control, and at its sole
discretion, to elect none, some or all of the following. This Agreement shall
otherwise remain in full force and effect.


 


(i)                                    The
provisions of this Agreement permitting the Acquired Party to vote in any
Committee decision [****].


 


(ii)                                The
Non-Acquired Party shall have the option [****].


 


(iii)                            The
Non-Acquired Party shall have [****].


 


(iv)                               Upon
[****] prior written notice, the Non-Acquired Party may [****]; and


 


(v)                                   The
Non-Acquired Party shall have the [****] to (A) [****] and (B) [****].
The purposes of such procedures shall be to strictly limit such disclosures to


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


85

















 


only those personnel
having a need-to-know Sensitive Information in order for the Acquired Party to
perform its remaining obligations under this Agreement and to prohibit the use
of Sensitive Information for competitive reasons against the Non-Acquired Party
and its Affiliates, including without limitation, the use of Sensitive
Information for the development or commercialization of competing products.


 


(b)                                  An
Acquired Party shall have the one-time right, at any time within [****]
following the election by the Non Acquired Party to exercise any of the rights
specified in Section 16.4(a)  to [****]. Upon written notice of the
Acquired Party’s intent to [****], the Acquired Party shall:


 


(i)                                    Continue
to participate in the equal funding of the Development and Commercialization of
each Collaboration Product in the Profit Sharing Territory until the next
applicable opt-out point specified in Exhibit 4.1(b)(iii) for such
Collaboration Product.


 


(ii)                                Promptly
comply with the provisions of Sections 4.3(c), 4.3(e), 4.3(f),  4.3(g) and 4.3 (h) with respect to
each Collaboration Product as if it were a Non-Developing Party thereunder.


 


(iii)                            Following
the termination of the Acquired Party’s funding obligation as set forth in Section 16.4(b)(i) above,
the Acquired Party shall thereafter be eligible to receive from the
Non-Acquired Party, for the term specified below, incremental royalties on Net
Sales of the relevant Collaboration Product at a royalty rate which is equal to
the sum of (A) [****] (B) [****], as applicable. The term of the
Non-Acquired Party’s obligation to pay a royalty under this Section 16.4(b) shall
expire on a country-by-country and Collaboration Product-by-Collaboration
Product basis, at the dates specified in Section 9.5. Each Collaboration
Product shall thereafter be deemed to be an Independent Product and all the
applicable provisions of the Agreement shall remain in full force and effect.


 


16.5                        In any
event, expiration or termination of this Agreement shall not relieve the
Parties of any liability which accrued hereunder prior to the effective date of
such expiration or termination nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity with respect
to any breach of this Agreement, nor prejudice either Party’s right to obtain
performance of any obligation.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


86

















 


ARTICLE 17



DISPUTE RESOLUTION; GOVERNING LAW


 


17.1                        Disputes.
Unless otherwise set forth in this Agreement, in the event of any dispute
arising under this Agreement between the Parties, the Parties shall refer such
dispute to the respective Executives, and such Executives shall attempt in good
faith to resolve such dispute.


 


17.2                        Arbitration.
Subject to the provisions of Section 2.8(c), if the Parties are unable
resolve a given dispute pursuant to Section 17.1 within [****] of
referring such dispute to the Executives, either Party may have the given
dispute settled by binding arbitration in the manner described below:


 


(a)                                  Arbitration
Request. If a Party intends to begin an arbitration to resolve a dispute
arising under this Agreement, such Party shall provide written notice (the “Arbitration Request”) to the other Party of such intention
and the issues for resolution. From the date of the Arbitration Request and
until such time as the dispute has become finally settled, the running of the
time periods as to which Party must cure a breach of this Agreement becomes
suspended as to the subject matter of the dispute.


 


(b)                                  Additional
Issues. Within [****] after the receipt of the Arbitration Request, the
other Party may, by written notice, add additional issues for resolution.


 


(c)                                  No
Arbitration of Patent Issues. Unless otherwise agreed by the Parties,
disputes relating to patents shall not be subject to arbitration, and shall be
submitted to a court of competent jurisdiction.


 


(d)                                  Arbitration
Procedure. Except as expressly provided herein, the sole mechanism for
resolution of any claim, dispute or controversy arising out of or in connection
with or relating to this Agreement or the breach or alleged breach thereof
shall be arbitration by the American Arbitration Association (“AAA”) in Los Angeles, California, or in such other venue as
the Parties agree, under the commercial rules then in effect for the AAA
except as provided herein. All proceedings shall be held in English and a
transcribed record prepared in English. The Parties shall choose, by mutual
agreement, one arbitrator within [****] of receipt of notice of the intent to
arbitrate. If no arbitrator is appointed within the times herein provided or
any extension of time that is mutually agreed on, the AAA shall make such
appointment within [****] of such failure. The award rendered by the arbitrator
shall not include costs of arbitration, attorneys’ fees or costs for expert and
other witnesses. Within [****] of initiation of arbitration, the Parties shall
reach agreement upon and thereafter follow procedures assuring that the
arbitration will be concluded and the award rendered within no more than [****]
from


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


87

















 


selection of the
arbitrator. Failing such agreement, the AAA will design and the Parties will
follow procedures that meet such a time schedule. The arbitrator (i) shall
not have any power or authority to add to, alter, amend or modify the terms of
this Agreement but shall specify rules sufficient to allow reasonable
discovery by the Parties; (ii) shall establish and enforce appropriate rules to
ensure that the proceedings, including the decision, be kept confidential and
that all Confidential Information of the Parties be kept confidential and be
used for no purpose other than the arbitration; (iii) shall have the power
to enforce specifically this Agreement and the terms and conditions hereof in
addition to any other remedies at law or in equity; and (iv) shall issue
all decisions in writing. Nothing in this Agreement shall be deemed as
preventing either Party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the Parties and the
subject matter of the dispute as necessary to protect either Party’s name,
proprietary information, trade secrets, know-how or any other proprietary right.
If the issues in dispute involve scientific or technical matters, any
arbitrator chosen hereunder shall have educational training and/or experience
sufficient to demonstrate a reasonable level of knowledge in the field of
biotechnology. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.


 


17.3                        Choice of
Law. The validity, performance, construction, and effect of this Agreement
shall be governed by the laws of the [****], U.S.A., without regard to
conflicts of law principles that would provide for application of the law of a
jurisdiction outside California and excluding the United Nations Convention on
Contracts for the International Sales of Goods.


 


ARTICLE 18



MISCELLANEOUS


 


18.1                        Assignment.
Each Party, without the consent of the other Party, may assign this
Agreement and its rights and obligations hereunder (i) [****], or (ii) [****].
Any permitted assignee shall assume all assigned obligations of its assignor
under this Agreement. The assigning Party shall promptly notify the other Party
of any such Change of Control and any such assignment and shall use all
reasonable efforts to provide such notification at least [****] before the
completion of the Change of Control and before the assignment. Except as
specifically provided in this Section 18 or in Section 3.7, this
Agreement may not be assigned or otherwise transferred, nor may any right or
obligation hereunder be assigned or transferred, by either Party without the
consent of the other Party. Any attempted assignment not in accordance with
this Section shall be void.


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


88

















 


18.2                        Force
Majeure. If either Party shall be delayed, interrupted in or prevented from
the performance of any obligation hereunder by reason of force majeure
including an act of God, fire, flood, earthquake, war (declared or undeclared),
public disaster, act of terrorism, strike or labor differences, governmental
enactment, rule or regulation, or any other cause beyond such Party’s
control, such Party shall not be liable to the other therefor; and the time for
performance of such obligation shall be extended for a period equal to the
duration of the force majeure which occasioned the delay, interruption or
prevention. The Party invoking such force majeure rights of this Section 18.2
must notify the other Party by courier or overnight dispatch (e.g., Federal
Express) within a period of fifteen (15) days of both the first and last day of
the force majeure unless the force majeure renders such notification impossible
in which case notification will be made as soon as possible. If the delay
resulting from the force majeure exceeds six (6) months, both Parties
shall consult together to find an appropriate solution.


 


18.3                        Entire
Agreement; Amendment. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter herein and, effective on
the Effective Date, supersedes all previous agreements between the Parties with
respect to the subject matter herein, whether written or oral, including the
existing confidentiality agreement between PDL and Biogen Idec. This Agreement
shall not be changed or modified orally, but only by an instrument in writing
signed by both Parties.


 


18.4                        Severability.
If any provision of this Agreement is declared invalid by a court of last
resort or by any court or other governmental body from the decision of which an
appeal is not taken within the time provided by law, then and in such event,
this Agreement will be deemed to have been terminated only as to the portion
thereof that relates to the provision invalidated by that decision and only in
the relevant jurisdiction, but this Agreement, in all other respects and all
other jurisdictions, will remain in force; provided, however, that if the
provision so invalidated is essential to the Agreement as a whole, then the
Parties shall negotiate in good faith to amend the terms hereof as nearly as
practical to carry out the original intent of the Parties, and, failing such
amendment, either Party may submit the matter for resolution pursuant to Article 16.


 


18.5                        Notices. Any
notice or report required or permitted to be given under this Agreement shall
be in writing and shall be mailed by nationally recognized overnight courier,
or faxed and confirmed by mailing, as follows and shall be effective one (1) day
after such mailing:


 


	
  If to PDL:

  	
  Protein Design Labs, Inc.

  
	
   

  	
  34801 Campus Drive

  
	
   

  	
  Fremont, California U.S.A. 94555

  
	
   

  	
  Attention: Chief Executive Officer

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  and

  	
  Protein Design Labs, Inc.

  
	
   

  	
  34801 Campus Drive

  



 


89

















 


	
   

  	
  Fremont, California U.S.A. 94555

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  If to Biogen Idec:

  	
  Biogen Idec Inc.

  
	
   

  	
  14 Cambridge Center

  
	
   

  	
  Cambridge, Massachusetts U.S.A 02142

  
	
   

  	
  Attention: Chief Executive Officer

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  and

  	
  Biogen Idec Inc.

  
	
   

  	
  14 Cambridge Center

  
	
   

  	
  Cambridge, Massachusetts U.S.A 02142

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Facsimile:

  



 


18.6                        Further
Assurances. The Parties agree to reasonably cooperate with each other in
connection with any actions required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish to each other such
further information; (b) execute and deliver to each other such other documents;
and (c) do such other acts and things (including working collaboratively
to correct any clerical, typographical, or other similar errors in this
Agreement), all as the other Party may reasonably request for the purpose of
carrying out the intent of this Agreement.


 


18.7                        Agency. Neither
Party is, nor will be deemed to be an employee, agent or representative of the
other Party for any purpose. Each Party is an independent contractor, not an
employee or partner of the other Party. Neither Party shall have the authority
to speak for, represent or obligate the other Party in any way without prior
written authority from the other Party.


 


18.8                        No Waiver.
Any omission or delay by either Party at any time to enforce any right or
remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof, by the other Party, shall not constitute a waiver of such
Party’s rights to the future enforcement of its rights under this Agreement. Any
waiver by a Party of a particular breach or default by the other Party shall
not operate or be construed as a waiver of any subsequent breach or default by
the other Party.


 


18.9                        No Strict
Construction. Each Party has had the opportunity to consult with counsel in
connection with the review, drafting and negotiation of this Agreement. Accordingly,
the rule of construction that any ambiguity in this Agreement shall be
construed against the drafting Party shall not apply.


 


18.10                 Headings. The
captions used herein are inserted for convenience of reference only and shall
not be construed to create obligations, benefits, or limitations.


 


90

















 


18.11                 Cumulative
Remedies. No remedy referred to in this Agreement is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to in this Agreement or otherwise available under law.


 


18.12                 Counterparts. This
Agreement may be executed in counterparts, all of which taken together shall be
regarded as one and the same instrument.


 


 


[Signature Page to Follow]


 


91

















 


IN WITNESS WHEREOF,
the Parties have executed this Collaboration Agreement through their duly
authorized representatives to be effective as of the Effective Date.


 


 


	
  PROTEIN DESIGN LABS, INC.

  	
  BIOGEN IDEC MA INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Mark McDade

  	
   

  	
  By:

  	
  /s/ James Mullen

  	
   

  
	
   

  
	
  Title:

  	
   President and CEO

  	
   

  	
  Title:

  	
      President

  	
   

  
	
   

  
	
  Date:

  	
  September 12, 2005

  	
   

  	
  Date

  	
    September 12, 2005

  	
   

  
										



 

















 


EXHIBIT A


PDL PATENT RIGHTS


 


I.                                         Queen
Patents


 


[****]


 


II.                                     [****]
Patent Rights


 


[****]


 


III.                                 [****]
Patent Rights


 


[****]


 


IV.                                 [****]
Patent Rights


 


[****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


EXHIBIT B


 


THIRD
PARTY LICENSES


 


[****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


94

















 


EXHIBIT C


 


FINANCIAL
PLANNING, ACCOUNTING AND REPORTING PROCEDURES

FOR COLLABORATION AGREEMENT


 


This Exhibit C
to the Collaboration Agreement (the “Agreement”)
dated as of the Effective Date, between Protein Design Labs, Inc. (“PDL”) and Biogen Idec MA, Inc. (“Biogen Idec”)
covers financial planning, accounting policies and procedures to be followed in
determining Development Expenses, Ongoing Development Expenses, Other
Out-of-Pocket Costs and Reimbursable Commercial Costs pursuant to the
Agreement.


 


For such
purpose, this Exhibit C sets forth the principles for reporting
actual results and budgeted plans in the Territory, the frequency of reporting,
the use of a single “Functional Currency”
(as defined in A.3) and the methods of determining payments to the Parties,
auditing of accounts and other matters.


 


This Exhibit C
also provides agreed upon definitions of financial terms applicable to the
Parties for purposes of the Agreement. All capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Agreement and, where
applicable, the further definitions contained herein. References in this Exhibit C
to a “Party” or “Parties”
shall be construed to mean Biogen Idec or PDL, as the case may be, and in every
case shall be deemed to include a Party’s Affiliates or sublicensees
under the Agreement.


 


The contents
of this Exhibit C are hereby incorporated into the Agreement and
are governed by the terms and conditions of the Agreement, including the
confidentiality provisions set forth therein. Notwithstanding anything in the
Agreement to the contrary, no cost, expense, amount or sum allocable or
chargeable to the Parties’ activities under the Agreement shall be
allocated or charged more than once. Unless otherwise specifically authorized
by the Parties or the Agreement, all costs, expenses, amounts or sums to be
charged or allocated by one Party to the other Party under the Agreement shall
not be so chargeable or allocable unless they are both directly related to the
Agreement and the activities to be performed under the Agreement and are
reasonable and customary with respect to the global biopharmaceutical industry
considering the respective size and activities of the two Parties as collaborators
under the Agreement.


 


A.                                    Definitions,
Reporting and Reconciliation


 


A.1.                          Definitions


 


A.1.1                   “Combination
Product” shall mean a product containing both the Collaboration Product and
one or more other active ingredients in addition to the Collaboration Product
where the other active ingredients have independent prophylactic or therapeutic
effect when used alone to treat the disease or indication for which the
Combination Product is labeled, whether the Collaboration Product and the other
active


 

















 


ingredients are together in a physical mixture or
packaged and priced together as a single product.


 


A.1.2                   “Combination
Product Amount” shall mean the following: in the event a Collaboration
Product is sold in the form of a Combination Product, and provided that the
JSC  has approved the sale and marketing
of such a Combination Product in a Commercialization Plan , Net Sales for such
Combination Product for purposes of this Agreement will be determined by [****].
If, on a country-by-country basis, the other active component or components in
the combination are not sold separately in such country, Net Sales shall be
calculated by [****]. If, on a country-by-country basis, the Collaboration
Product component of the Combination Product is not sold separately in such country,
but the other active component or components are sold separately, Net Sales
shall be calculated by [****]. If, on a country-by-country basis, neither the
Collaboration Product nor the other active component or components of the
Combination Product is sold separately in such country, [****].


 


A.1.3  “Cost of
Clinical Supplies”  shall mean a
Party’s costs to produce [****], to the extent that such costs would ordinarily
be included [****] for a similar product, including without limitation labor
and material cost, allocable depreciation and amortization, product quality
assurance/control costs, allocable facilities costs (e.g., sewer, water,
property taxes), Third Party Royalties, insurance, and other costs borne by the
party for transport, customs and duty clearance and storage of Clinical
Supplies of Collaboration Product. [****].


 


A.1.4                   “Cost of Goods
Manufactured for Sale” or “COGM” shall mean a Party’s costs to produce [****]
and/or [****] to the extent that such costs would ordinarily be included [****]
for a similar product, including without limitation labor and material cost,
allocable depreciation and amortization, product quality assurance/control
costs, allocable facilities costs (e.g., sewer, water, property taxes), Third
Party Royalties, insurance, and other costs borne by the party for transport,
customs and duty clearance and storage of Commercial Supplies of Collaboration
Product. [****].


 


A.1.5                   “Cost of Sales”
shall mean a Collaboration Product’s Cost of Goods Manufactured for Sale [****],
Third Party Royalties (i.e., any allocable intellectual property acquisition
and licensing costs not included in COGM) and transport, customs and duty
clearance on sales if borne by the seller.


 


A.1.6                   “Development Expenses”  shall mean the
costs and expenses associated with Development activities actually for each
Collaboration Product incurred by Biogen Idec or PDL or their Affiliates from August 2,
2005, provided that the provisions of Section 3.5(a)(ii) are complied
with, and otherwise, from the Effective Date through the later of (a) [****],
or (b) [****]. The costs and expenses associated with


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


96

















 


Development
activities shall include those costs required to obtain, maintain and/or expand
the authorization and/or ability to manufacture, formulate, fill, ship and/or
sell Collaboration Product in commercial quantities to Third Parties in the
Territory, including the costs of the Parties associated with the transfer of,
and implementation of manufacturing technology necessary to qualify a
manufacturing facility. Development Expenses shall also include, but are not
limited to, costs of research or Development, including costs of studies on the
toxicological, pharmacological, metabolical or clinical aspects of a
Collaboration Product conducted internally or by individual investigators or
consultants and necessary for the purpose of obtaining, maintaining and/or
expanding marketing approval of a Collaboration Product, process development,
process improvement and scale-up costs, validation costs, including
qualification lots, the manufacture of Clinical Supplies of Collaboration
Product, and costs for preparing, submitting, reviewing or developing data or
information for the purpose of submission to a governmental authority to
obtain, maintain and/or expand manufacturing and/or marketing approval of a
Collaboration Product and costs of marketing studies related to Collaboration
Product. Development Expenses shall include the previously incurred cost of any
inventory of Collaboration Products held by PDL at the Effective Date, provided
that the date at which the cost of any such inventory shall be deemed to be
incurred by PDL as a Development Expense shall be the date such product is
shipped for use in Clinical Trials for a Collaboration Product. Development
Expenses shall also include expenses for data management, statistical designs
and studies, document preparation, and other administration expenses associated
with the clinical testing program. In determining Development Expenses
chargeable under this Agreement, each Party will use its respective project
accounting systems, and will review its respective project accounting systems
and methodologies with the other Party. The Parties shall agree upon and
consistently apply methodologies for calculating and allocating Development
Expenses based on their respective internal accounting systems. The Parties
hereby agree that efforts of the employees of a Party or its Affiliates in
performing its activities hereunder shall be charged as Development Expenses at
the applicable FTE Rate. Notwithstanding anything in this Section to the
contrary, only those Development Expenses that are contemplated by the
Development Plan and an Annual Workplan/Budget or were otherwise approved by
the JSC shall be chargeable by a Party as Development Expenses with any cost
overruns treated in the manner set forth in Section A.2.2 of this Exhibit C.
All payments made by a Party to a Third Party in connection with the
performance of its activities under the Development Plan and an Annual
Workplan/Budget shall be charged as Development Expenses at such Party’s actual
out-of-pocket cost. The Cost of Clinical Supplies of Collaboration Product
shall be charged as a Development Expense. Except to the extent included in
Cost of Clinical Supplies of Collaboration Product, expenses incurred by each
Party for equipment, materials and supplies utilized in performing its
activities under the Development Plan and an Annual Workplan/Budget shall not
be separately charged as Development Expenses, except for those expenses
incurred by a Party, with the prior written consent of the JSC as set forth in
the Development Plan and Annual Workplan/Budget, in the purchase or making of
equipment, materials or supplies (other than common laboratory supplies, e.g., pipettes, test tubes, petri dishes, reagents, and the
like) that are to be used exclusively in connection with the performance of
such


 


97

















 


Party’s
activities under a Development Plan and an Annual Workplan/Budget (e.g., laboratory animals, placebo supplies, etc.), which
expenses shall be charged as Development Expenses at such Party’s actual
out-of-pocket expense incurred in purchasing or making such equipment,
materials or supplies. Special purchases of capital equipment not related to
Manufacturing that are used solely for purposes of the Collaboration shall be
approved in advance by the JSC.


 


A.1.7                   “Distribution Costs”  shall mean the
FTE costs and other costs specifically identifiable or allocable to the
distribution of Collaboration Product by a Party and described in an Annual
Commercialization Plan/Budget including warehousing, transportation, order
entry, billing, shipping, credit and collection and other such activities as
approved by the JSC. For purposes of this definition, FTE costs shall be
charged at the applicable FTE Rate.


 


A.1.8                   “FTE Rate” shall
mean as defined in Section A.6 of this Exhibit C.


 


A.1.9                   “Gross Sales” shall mean the gross amount invoiced by a Party
or its Affiliates or sublicensees for sales of a Collaboration Product to Third
Parties in the Territory, including sales to distributors. For clarity, Gross
Sales will include a Party’s revenue from distributors, and not revenue of the
distributors themselves. A sale or transfer of a Collaboration Product by a
Party to one of its Affiliates shall not be considered a sale to a Third Party
for the purpose of this provision but the resale of such Collaboration Product
by such Affiliate to a Third Party shall be a sale for such purposes. In the
event the Collaboration Product is sold in the form of a Combination Product,
Gross Sales will be the Combination Product Amount. Each Party shall
communicate to the other Party any mandatory discounts to Gross Sales levied by
any Third Party.


 


A.1.10            “Marketing Costs”
shall mean the FTE costs and other direct costs of marketing, promotion and
advertising, including, without limitation, costs for preparing and reproducing
detailing aids, Collaboration Product promotional Materials and other
promotional materials,  costs of professional education,  product related public relations, relationships with
opinion leaders and professional societies, market research (before and after
product approval), healthcare economics studies, Post-Approval Clinical Trials,
and other similar activities directly related to the Collaboration Products, in
each case as approved by the JSC as part of the Commercialization Plan and an
Annual Commercialization Plan/Budget. Such costs may also include actual
out-of-pocket costs for outside services and expenses (e.g., consultants,
agency fees, meeting costs, etc.). “Marketing Costs” shall also include
activities related to obtaining reimbursement from payers, costs of sales and
marketing data, and costs not previously included as Sales Costs. For purposes
of this definition, FTE costs shall be charged at the applicable FTE Rate, as
set forth in Section A.1.16 of this Exhibit C.


 


A.1.11  “Net Sales” shall
mean Gross Sales of a Collaboration Product less applicable Sales Returns and
Allowances.


 


A.1.12  “Ongoing Development Expense” shall mean FTE costs and


 


98

















 


other costs
and expenses borne by either Party or its Affiliates with respect to Phase IV
Clinical Trials approved by the JSC and other expenses approved by the JSC
associated with market positioning of a Collaboration Product to the extent not
otherwise included within Development Expenses or Marketing Costs or Sales
Costs under any other written agreement between the Parties or their Affiliates
relating to Collaboration Product. For purposes of this definition, FTE costs
shall be charged at the applicable FTE Rate.


 


A.1.13  “Operating Expenses” shall mean Cost of Sales,  Marketing Costs,  Sales Costs, Ongoing Development
Expenses,  Other Out-of-Pocket Costs and
Distribution Costs


 


A.1.14  “Other Out-of-Pocket Costs” shall mean other operating
expenses paid by the Parties or their Affiliates to Third Parties which are not
part of Development Expenses, but are considered and approved by the JSC as
expenses for purposes of the cost sharing arrangements under the Agreement. Other
Out-of-Pocket Costs shall be limited to the following:


 


•                       Third Party
License Fees (other than those related to the manufacture of Collaboration
Product to the extent covered under any other written agreement between the
Parties or their Affiliates related to Collaboration Product)


 


•                       Patent
Costs and trademark costs (as limited by Article 12 of the Agreement)


 


•                       product
liability insurance to the extent the Parties obtain a joint policy


 


•                       costs
pursuant to joint ownership of intellectual property as outlined in Article 12
of this Agreement


 


•                       costs
incurred in the defense of infringement suits pursuant to Section 12.8 of
the Agreement


 


•                       other
expenses approved by the JSC


 


A.1.15  “Post-Approval Clinical Trial” shall mean any clinical trial
in an indication, other than a Phase 3 Clinical Trial or Phase 4 Clinical
Trial, to be conducted after a Regulatory Approval for such indication.


 


A.1.16            “Sales Costs” shall
mean FTE costs and other direct costs approved by the JCC as part of the
Commercialization Plan and an Annual Commercialization Plan/Budget and
specifically identifiable to sales of Collaboration Products in the Territory. Sales
Costs shall include costs associated with Sales Representatives and training of
the Sales Representatives, sales meetings, details, sales call reporting, work
on managed care accounts, costs related to customer service and other sales and
customer service-related expenses. Sales Costs will not include start-up costs
associated with either Party’s sales force, including recruiting, relocation


 


99

















 


and other similar costs. The annual FTE cost shall be determined based
on the actual FTE cost from the prior budget year for the respective Sales,
Marketing, Customer Service, Managed Markets, Decision Support and Medical
Affairs functions of each Party, with one collaboration FTE rate established
each year for all sales and marketing functions.


 


A.1.17  “Sales Returns & Allowances” shall
mean the sum of (a) and (b), where: (a) [****]; and (b) [****].


 


It is the
intention of the Parties that the interpretation of these definitions in this Exhibit C
will be in accordance with U.S. GAAP consistently applied in accordance with
Biogen Idec then current practices. A Party will promptly make the appropriate
adjustments to the financial information it supplies under the Agreement to
reflect changes to the provisions, including reasonable detail underlying the
adjustment, in reporting results of operation.


 


A.2.1. Reporting.
Each Party shall report to the other Party forecasts, budgets and actual
results of operations related to the following:


 


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


100














 


Reporting by
each Party will be performed as follows:


 


	
  Reporting Event

  	
   

  	
  Frequency

  	
   

  	
  Timing of Submission

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 


The financial
representatives from the Parties will review financial information [****] and
meet as appropriate but shall in any event meet in person at least quarterly to
review and approve the following:


 


•                       [****]


•                       [****]


•                       [****]


•                       [****]


•                       [****]


 


Costs included
in Cost of Clinical Supplies are not subject to JSC approval as long as they
are consistent with the definitions and within the JSC approved budget.


 


A.2.2  Reconciliation Statements.
Within [****] following the end of a Calendar Quarter, each Party shall submit
to the other Party its report of actual results as outlined above (including a
summary of charges and credits allocated to its Development Expense Project
Account). Expenses charged by either Party as Ongoing Development Expenses,
Other Out-of-Pocket Costs and Development Expenses shall not exceed [****] of
the amount included for the total expenditure in the then current Development
Plan or Annual Workplan/Budget, as the case may be, unless the JFC recommends,
and the JSC approves such excess expense. If actual costs of any expense line
item in implementing an Annual Work Plan/Budget or the Development Plan is
expected to vary by more than [****], then the Party incurring the variance(s)
has


 


101

















 


the obligation
to inform the other Party of such variance(s) in a timely manner and to discuss
with such Party the causes of the variance(s). Any such discussion as to the
cause of the variances shall occur at the JFC. If the actual costs of
implementing an Annual Work Plan/Budget or the Development Plan are expected to
vary by more than [****] from the amounts budgeted for expenditure during the
calendar year, the Responsible Development Party will promptly revise, as
applicable, the Annual Workplan/Budget or Development Plan and submit it in
writing, with an explanation of the variance and the reasons therefore, for
approval to the JSC. If the JSC does not approve the variance, the amount by
which the actual costs exceed [****] of the budgeted costs shall be borne by
the Party that incurred the costs.


 


The financial
representatives from each Party on the JFC shall be responsible for, within [****]
days following the end of a Calendar Quarter, preparing a statement (“Reconciliation Statement”) in a format agreed to by the
Parties showing each Party’s results, the calculations of Ongoing Development
Expenses, Other Out-of-Pocket Costs, Cost of Clinical Supplies, COGM and Development
Expenses sharing under Section 3.6 of the Agreement and any cash
settlement required. The Reconciliation Statement and reports of actual results
compared to budget will be sent to the JFC, within [****] following the end of
a Calendar Quarter for approval. After approval by the JFC, the JFC will
forward the Reconciliation Statement to the JSC for its information or approval
in the case of a dispute. The Reconciliation Statement shall be provided to the
JSC [****] prior to the date upon which the JSC shall meet to approve the
Reconciliation Statement, if approval is being sought. Reconciliation
Statements shall be made by PDL or Biogen Idec in the manner set forth in Section A.5
of this Exhibit C.


 


A.3  Foreign Exchange. The
“Functional Currency” for accounting for
Ongoing Development Expenses, Other Out-of-Pocket Costs and Development
Expenses will be U.S. dollars. Except as the Parties otherwise mutually agree,
for billing and reporting, the statement of operations will be translated into
U.S. dollars using the [****] listed in The Wall Street Journal
for the [****]. If, due to restrictions or prohibitions imposed by national or
international authority, payments cannot be made as provided in this Section,
the Parties shall consult with each other with a view towards finding a prompt
and acceptable solution, and the paying Party will transfer funds as the other
Party may lawfully direct at no additional out-of-pocket expense to the paying
Party.


 


A.4  Audits and Interim Reviews.
Either Party shall have the right to request that a nationally recognized,
independent accounting firm to be mutually agreed upon by the Parties and that
is not either Party’s independent accounting firm perform an audit
or interim review of the other Party’s books and records as they relate to


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


102

















 


activities
under this Agreement in order to express an opinion regarding such Party’s
accounting for revenues, costs and expenses under this Agreement. Such audits
or review will be conducted at the expense of the requesting Party. Either
Party shall have the right to request that a nationally recognized, independent
accounting firm to be mutually agreed upon by the Parties and that is not
either Party’s independent accounting firm perform an audit of the other Party’s
books of accounts for the sole purpose of verifying compliance with the
Agreement and the Transaction Agreements. Upon [****] prior written notice from
a Party (the “Auditing Party”), the other Party
(the “Audited Party”) shall permit the
mutually agreed upon independent accounting firm to examine the relevant books
and records of the Audited Party and its Affiliates as may be reasonably
necessary to verify the reports and information submitted by the Audited Party
and the accuracy of any Reconciliation Statement. An examination by a Party
under this Section shall occur not more than [****] and shall be limited
to the pertinent books and records for any calendar year ending not more than [****]
before the date of the request. The accounting firm shall be provided access to
such books and records at the Audited Party’s facility(ies) and/or the
facilities of its Affiliates or sublicensees where such books and records are
normally kept and such examination shall be conducted during the Audited Party’s
normal business hours. The Audited Party may require the accounting firm to
sign a standard non-disclosure agreement with terms that are not inconsistent
with the terms of the Agreement before providing the accounting firm access to
the Audited Party’s facilities or records. Upon completion of the audit, the accounting
firm shall provide both Biogen Idec and PDL a written report disclosing whether
the reports submitted by the Audited Party are correct or incorrect and the
specific details and supporting analysis for any discrepancies. No other
information shall be provided to the Auditing Party. If the accounting firm
determines that, based on errors in the reports so submitted, any report
prepared in accordance with the Agreement is incorrect, the Parties shall
promptly revise the report and the associated Reconciliation Statement and any
additional amount owed by one Party to the other shall be paid within [****]
after receipt of the accountant’s report, along with interest at the lesser of (i) the
[****] or (ii) the highest rate permitted by applicable law from the date
that such additional amount should have first been paid; provided,
however, that no such interest shall be
payable if the errors leading to the Reconciliation Statement being incorrect
were in the reports provided by the Party to receive such additional amount. Additionally,
if the accountant determines that the reports submitted by the Audited Party
overstate the Audited Party’s share by more than [****], the Audited Party
shall reimburse the Auditing Party for the expenses incurred by the Auditing
Party in conducting the audit. Notwithstanding anything to the contrary herein,
the Parties shall coordinate with their Affiliates such that not more than [****]
audit of a Party and its Affiliates as a whole, shall be performed in any given
calendar year with respect to the


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


103

















 


development,
manufacturing, commercialization or other use of the Collaboration Product
under any written agreement between the Parties and/or their Affiliates
relating to the Collaboration Product. In the event of any sublicense or
transfer of rights with respect to Collaboration Products by a Party under this
Agreement, the sublicensor or transferor shall provide for audit rights by the
other Party to this Agreement in accordance with this Section A.4 of this Exhibit C.


 


A.5 
Payments Between the Parties. Based upon the
Reconciliation Statement, as approved by the JFC or the JSC, as applicable,
there shall be a cash settlement between the Parties no later than [****]
after the end of each Calendar Quarter. In the event any payment is made after
the date specified in the preceding sentence and provided that such payment is
not otherwise subject to good faith dispute, the paying Party shall increase
the amount otherwise due and payable by adding interest at the lesser of (i) [****]
or (ii) the highest rate permitted by applicable law from the date that
such additional amount should have first been paid. Except where the actual
expenses for the Daclizumab development exceeds the annualized budget/plan by
more than [****], and such variances were approved by the JSC, then the Parties
shall get a payment deferral of [****] for cash settlement of the amount in
excess of [****] of the annualized budget/plan. If a Party elects to defer
payments during this time, interest will accrue [****] and through settlement.


 


Any other amount owed by one Party to the
other Party under this Agreement, except for amounts pursuant to Reconciliation
Statements, that is not paid within the applicable time period set forth herein
shall bear simple interest [****], as reported in the Wall Street Journal,
Eastern Edition, on the due date (or, if the due date is not a business day, on
the last business day prior to such due date).


 


A.6                             FTE
Methodology


 


A.6.1                   Accounting for
Development Expenses. All Development Expenses, Ongoing Development Expenses
and Other Out-of-Pocket Costs will be based on the appropriate costs definition
stated in the Agreement or Section A.1 of this Exhibit C.


 


Each Party shall report Development Expenses
and Ongoing Development Expenses based on its project cost system (which shall
in any event track FTEs by functional area and by month) or using such other
system as such Party applies with respect to its internal programs and which
system has been reviewed with the JFC. In general, these project cost systems
shall report actual and/or allocable time spent on specific projects, apply the
FTE Rates, determined in the manner specified below, capture actual and/or
allocable costs of specific projects and allocate other expenses to


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


104

















 


projects. For
Other Out-of-Pocket Costs the Parties will allocate costs based on spending in
the relevant departments or applying such other allocation methodology as such
Party uses with respect to all other products taken as a whole, and which shall
be approved by the JSC.


 


A.6.2                   Research and
Development FTE Rate. For the [****], the FTE rate will be set at [****]
per year. FTE Rates will increase annually to reflect the change over the
preceding [****] for which data is then available in the [****], All Items (as
published by the [****]).  FTE Rates
shall be set in a manner, which fairly reflects the direct costs of each Party
for the direct functional groups specified below:


 


Direct
Functional Groups.       Research &
Development shall include the following: Research, Project Management,
Preclinical, Product Development/QA, Medical Research/Medical
Operations/Clinical, Biometry (biostatistics and data management), Medical
Writing,  Regulatory Affairs/Drug Safety,
Manufacturing (not including production of Clinical Supplies and commercial supplies,
which will be stated in the Clinical Supply Plan for Clinical Supplies and in
the Commercial Supply Agreement for Commercial Supplies).


 


Total budgeted
expenses incorporated in the FTE Rate shall include and be limited to: [****].


 


A.7                             Principles
of Reporting


 


The results of operations of the Collaboration will be presented in the
following format (on a per Collaboration Product basis), with the categories as
defined in Section A.1 below:


 


A.7.1                   Income
Statement


 


Gross Sales


Less: Sales
Returns and Allowances


= Net Sales


Less: Cost of
Sales


= Gross
Profits


Less:
Marketing Costs


Less: Sales
Costs


Less: Ongoing
Development Expenses


Less: Other
Out-of-Pocket Costs


= Contribution


Less:
Distribution Costs


=
Collaboration Product Profit (Loss)


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 


105

















 


Separately
reported will also be:


 


Other Development Costs


 


Development Expenses


 


Cost of Clinical Supplies


 


Ongoing Development Expense


 


It is the intention of the Parties that the
interpretation of these definitions will be in accordance with U.S. GAAP
consistently applied consistent with a Party’s report in its financial statements
filed in accordance with the Securities Exchange Act of 1934, as amended.


 


A.7.2                   Subcomponent
Reporting


 


For reporting purposes only, expenses will be
identified for the budget, forecast, and quarterly actual amounts within this Section A.7.
by the following detail sub-components within the aggregate Income Statement
expense components specified under Section A.7.1.


 


•                  Cost
of Sales – cost of goods manufactured for sale, third party royalties, freight &
other


•                  Marketing
– marketing promotion, market research, marketing headcount


•                  Sales
– sales headcount, sales promotion & sales operations


•                  Development
– by indication label-enabling activities & trials, by indication post
marketing activities & trials, cost of goods manufactured for clinical
supply, medical education.


 


A.8                             Budget
and Long Range Plan


 


Responsibility for the Budget and Long Range Plan with regard to
Collaboration Products, prior to the First New Product FDA Approval, will be as
specified in Articles 2 and 3 of the Agreement


 


Budgets will be prepared annually for the following full calendar year
containing monthly details/numbers.


 


Budgets will be supplemented with high level business plans and costs
for clinical trials, registration applications, and plans for product
introduction, sales efforts and promotion.


 


106

















 


EXHIBIT D
:  OPT OUT ROYALTIES AND ROW ROYALTIES


 


I. OPT-OUT ROYALTIES FOR
COLLABORATION PRODUCTS


 


	
   

  	
   

  	
  Existing Products

  	
   

  	
  Existing Products

  	
   

  	
  Future Products

  	
   

  
	
   

  	
   

  	
  Payable to Biogen

  Idec

  	
   

  	
  Payable to PDL

  	
   

  	
  Payable to Biogen

  Idec/ PDL

  	
   

  
	
  Preclinical

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  Phase I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  Phase II

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  Phase III

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  After
  Approval

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






*Royalties in %


 


II. ROW ROYALTIES OWED FOR ROYALTY
PRODUCTS


 


	
   

  	
   

  	
  ROW Royalty

  payable to PDL

  	
   

  	
  Royalty on

  Termination**

  payable to

  Biogen Idec

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






	
  *Royalties
  in %

  



 






**Note:  The royalty in table
applies provided that diligent efforts were underway in the territory, and that
such termination was Phase III or later in the US and EU territories. In the
event that this is not the case, Phase II royalties should apply for Biogen
Idec in the ROW territory:


 


[****]


[****]


[****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


Exhibit 1.41


 


Daclizumab PRODUCT


 


[****]


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


EXHIBIT 1.54


 


Fontolizumab PRODUCT


 


[****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


EXHIBIT 1.135


 


Volociximab
PRODUCT


 


[****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


Exhibit 2.1


 


Joint Operating Principles


 


The following Principles are intended as guidelines for the operation
of the Committees and Collaboration, but the specific terms of the Agreement
shall be controlling in the case of any conflict between a provision of the
Agreement and these guidelines.


 


 Guiding Principles


 


•                  Engage in
development activities with the goal of obtaining regulatory approval for each
collaborative product as soon as reasonably practicable in major market
countries where it makes commercial sense to do so given the economic profile
and the safety and efficacy profile of such collaborative product


•                  Utilize the
then-prevailing infrastructure, expertise and experience of each party with
respect to specific development activities for collaborative products in
specific indications


•                  Create
reasonable flexibility to allow each party to build infrastructure for
development and commercialization activities if it reasonably elects, provided
that the cost associated with building such infrastructure are not charged to
the reimbursable activities under this agreement


•                  Avoid
unnecessary duplication of resources


•                  Maximize
information flow between parties


•                  Allow each party
to have input into the content and scope of Registrations for collaborative
products and, through their Joint Steering Committee representatives, the right
to approve substantive portions of any registrations


•                  Allow each party
to participate in substantive interactions with Regulatory Authorities related
to collaborative products


 


1.                                      Development:  Joint Development Plan


 


Each joint development plan shall be in the form agreed upon by the
Joint Strategy Committee, but shall address, at a minimum, the following:


•                  Goals for the
development of the collaborative products


•                  Critical
decision points criterion


•                  Scope of
research and clinical work, including regulatory strategy


•                  Timeline for
performing research and clinical work


•                  Anticipated
indications, including the desired product profile and formulation


•                  Competitive
market issues


•                  High level cost
and other financial estimates


•                  Manufacturing,
product supply and cell-line development activities


•                  General
commercialization framework


 

















 


•                  Operational
responsibilities for each party


•                  Key technical
and commercial assumptions


 


2.                                      Development:  Annual Work Plan


 


•                  A reasonable
detailed description of the development activities to be performed during the
next full calendar year or to the next key decision point 


•                  The estimated
budget for such activities for at least the next full calendar year 


•                  A designation of
which party is responsible for each task 


•                  Estimated
staffing levels 


•                  Any expected use
of Third Party contractors required to carry out the applicable development
activities and the party that shall manage such third party contractor 


•                  Estimated
timelines for completion of such activities 


•                  Estimated
product requirements for each activity


 

















 


Exhibit 3.3


 


Initial Development Plans And Initial
Development Program Budget For Existing Products


 


Neither Party shall be obligated to incur costs for any activities,
except for those set forth herein, unless and until (a) such
study/activity is approved by the JSC, or (b) is included in a Development
Plan approved by the JSC pursuant to Section 3.3(b) of the Agreement.


 


All costs submitted for reimbursement by the Parties must be
demonstrably related to the activities specified in this draft Development
Plan.


 


I. Development Plan for Daclizumab in [****]


 


2.1                               A.
Daclizumab in [****]:  Clinical Program
Rationale and Strategy 


 


[****].


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


B. Daclizumab in [****]:  Clinical Development Studies 


 


	
  Study

  	
   

  	
  N

  [Active;

  Placebo]

  (Inv.

  Centers)

  	
   

  	
  Purpose

  	
   

  	
  First

  Patient

  Dosed

  	
   

  	
  Last

  Patient

  Visit

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost ****

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  



 






Notes:* – Pivotal studies; ** TBD – to be determined; *** dac –
Daclizumab; **** [****].


 


C. Daclizumab
in [****]:  Timetable of Development
Milestones 


 


	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  



 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


II. Development Plan for Volociximab in [****]


 


A. Volociximab in [****]:  Clinical Program Rationale and Strategy 


 


[****]


 


B.
Volociximab in [****]:  Clinical
Development Studies


 


	
  Study

  	
   

  	
  Est. # Pts

  (# of

  Centers)

  	
   

  	
  Purpose of

  study

  	
   

  	
  Est. Start

  Date

  	
   

  	
  Est. Last

  Patient visit

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost*

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






* [****].


 


C. Volociximab in [****]:  Major Project Milestones 


 


	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  



 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


III. Development Plan for Volociximab in [****]


 


A. Volociximab in [****]:  Clinical Development Rationale and Strategy


 


[****]


 


B.
Volociximab in [****]:  Clinical
Development Studies


 


	
  Study

  	
   

  	
  Est. # Pts (#

  of Centers)

  	
   

  	
  Purpose of

  study

  	
   

  	
  Est. Start

  Date

  	
   

  	
  Est. Last

  Patient

  visit

  (safety)

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost*

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






* [****].


 


C. Volociximab in [****]:  Major Project Milestones 


 


	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  



 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


IV. Development Plan for Fontolizumab in [****]


 


A. Fontolizumab in [****]:  Clinical Development Rationale and Strategy


 


[****]


 


B.
Fontolizumab in [****]:  Clinical
Development Studies


 


	
  Study

  	
   

  	
  Est. # Pts

  (# of

  Centers)

  	
   

  	
  Purpose of

  study

  	
   

  	
  Est. Start

  Date

  	
   

  	
  Est. Last

  Patient

  visit

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost*

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






* [****].


 


C. Fontolizumab in [****]:  Major Project Milestones 


 


	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  



 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


V. Initial
Program Budget for Existing Products


 


2005 FTE and External Cost  ($ in thousands)


 


	
  Function

  	
   

  	
  Type

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  Program

  Totals

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  



 






* An additional [****]
in [****] expense will be incurred if the [****] trial enrolls on plan.


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


EXHIBIT 4.1(b)(ii)


OPT OUT POINTS FOR EXISTING
COLLABORATION PRODUCTS


 


2.1                               Daclizumab


 


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


 


2.2                               Fontolizumab


 


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


2.3                               Volociximab


 


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


•                  [****]


 


 


Opt out points for New Collaboration Products or Indications shall be
decided by the JSC.


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


Exhibit 8.3


 


A Commercial Supply Agreement between the Parties for
Collaboration Products or Royalty Products shall contain, in addition to
customary manufacturing terms and conditions, the following obligations:


 


a.               The Responsible Commercialization Party
shall purchase [****] of its, its Affiliates and its sublicensees’ commercial
requirements of Collaboration Product from the Manufacturing Party.


 


b.              The Parties will agree to reasonable
forecasting mechanisms in the Commercial Supply Agreement. The Manufacturing
Party will provide the other Party with notice not less than [****] in advance
of any anticipated change in annual production that would impact such party’s
ability to meet forecasted demand.


 


c.               Collaboration Product shall be Manufactured
in accordance with all requirements of applicable laws and regulations and all
GMP, as prescribed from time to time by the FDA and other applicable worldwide
regulatory authorities, using the product specifications, manufacturing methods
and formulae as agreed upon by the Parties.


 


d.              If either Party believes that any
Regulatory Approval, GMP, or other applicable law, or any other notice from a
regulatory authority, shall require a change to the particular product specifications,
the Parties shall consult prior to the implementation of such change in order
to mutually determine whether such change is, in fact, required by such
Regulatory Approval, GMP, other applicable law or notice. Any such change in
product specifications will be effected upon mutual agreement of the Parties.


 


e.               In the event either Party is unable to obtain
Regulatory Approval for a Collaboration Product and such lack of approval is
related to the CMC Section, then the other Party shall have the right to become,
and assume all of the responsibilities of, the Manufacturing Party for such
product.


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


f.                 The non-Manufacturing Party shall have the
right to conduct (upon reasonable notice during reasonable business hours)
reasonable quality assurance audits with respect to all facilities, operations
and laboratories (and any records related thereto) of the Manufacturing Party
or, if applicable, the Third Party contract manufacturer used by such Party,
where applicable Manufacturing activities are conducted, as is reasonably
necessary to verify the compliance with GMP and other regulatory requirements.
The results of any such audit shall be provided to the other Party.


 


g.              The Manufacturing Party may
not utilize a Third Party contract manufacturer without the consent of the
non-Manufacturing Party.


 


h.              The Manufacturing Party shall
be responsible for release of product from its and its Third Party CMO’s
facilities. The non Manufacturing Party shall have access to, and the right to
review, all release documentation for any evidence of product nonconformance.


 


i.                  If the Manufacturing Party
desires to use a Third Party to perform any part of the Manufacture and supply
or if the Manufacturing Party plans to undertake capacity expansion,
significant facility improvements, or the purchase of capital equipment for the
Manufacture of Collaboration Product, the JSC shall first consider whether the
other Party has the ability, capability, and desire to perform such Manufacture
and supply and, if so, the Parties shall amend the Commercial Manufacturing
Agreement to cover the part of the Manufacture and supply to be performed by
such other Party.


 


j.                  In the event that the non Manufacturing
Party consents to use of a Third Party contract manufacturer, the Manufacturing
Party shall enter into a supply agreement and quality agreement and shall
ensure that the non Manufacturing Party shall either be a party to such
agreements (in addition to the Responsible Manufacturing Party), or a third
party beneficiary of such agreements. To the extent the non Manufacturing Party
is not a party to such agreements, it shall be a permitted assignee or
sublicensee under such agreement.


 


k.               The non Manufacturing Party shall have the
right to review and comment upon the Third Party supply agreement and quality
agreement.


 


l.                  If the Manufacturing Party utilizes a Third
Party contract manufacturer, such supply agreement shall require the Third
Party supplier to transfer sufficient information (including information
contained in the CMC section of any applicable Regulatory Filings, the
results of any stability studies performed on Product and copies of any direct
communications between the Third Party supplier and regulatory authorities in
relation to Product) to


 

















 


Biogen Idec or PDL (as appropriate), in each case as is required to
implement the then-most current versions of such Manufacturing process, upon
termination of such agreement or otherwise upon request.


 


m.            If the Manufacturing Party is unwilling or unable to meet [****]
of the Responsible Commercialization Party’s requirements for Collaboration
Product on the timelines set forth in the Commercialization Plan for such
Collaboration Product or if the Collaboration Product Manufactured consistently
does not meet the requisite Product specifications and other quality
requirements set forth herein, then the Manufacturing Party shall, at the election of the other
party, conduct a transfer of the necessary Manufacturing
Technology to the non Manufacturing Party so as to enable it to Manufacture or
have Manufactured such Product by a Third Party contract manufacturer of its
choice. The non Manufacturing Party, upon such transfer, shall become the
Manufacturing Party for purposes of the Collaboration Product.


 


n.              The Parties shall enter into a Technology
Transfer Agreement containing the FTE Plans and costs related to CMC/filing
activities for the Collaboration Products. In addition, the Parties shall enter
into a Quality Agreement related to the Manufacture of the Collaboration
Products. Such Quality Agreement shall specify the designated Qualified Person
for release of finished Collaboration Products.


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.


 

















 


Exhibit 11.5


 


Required Attachment of Certain Provisions of the [****]


 


[****]


 


 






*Certain information on
this page has been omitted and filed separately with the commission.
Confidential treatment has been requested with respect to the omitted portions.